The Great Depression: A Global Economic Catastrophe

Overview

• The Great Depression was a global event causing significant poverty worldwide.
• Led to bread lines and shantytowns in America and the rise of the Third Reich in Germany.
• The Stock Market Crash of 1929 is commonly seen as a starting point, but underlying issues existed earlier.

Economic Conditions Leading to the Depression

Europe

• Post-WWI Europe had a damaged economy, with Germany severely impacted by reparations.
• Hyperinflation in Germany: By 1923, one trillion German Marks equaled one US dollar.
• The Dawes Plan temporarily alleviated Germany's economic woes but did not prevent far-right rise.

United States

• The 1920s: Economic boom with tax cuts, rising wages, and consumerism.
• The automobile industry stimulated the economy, transforming the American landscape.
• Stock market speculation was rampant, with many buying stocks on credit.
• Despite apparent prosperity, global trade stalled, and agriculture struggled post-WWI.

The Stock Market Crash of 1929

• October 24, 1929: Known as Black Thursday, marked by panic selling of stocks.
• Resulted in massive unemployment and industries collapsing.
• Bank failures, as small banks couldn't handle withdrawals, leading to a credit freeze and further economic downturn.

Political and Economic Responses

Herbert Hoover's Presidency

• Hoover blamed for economic collapse.
• Attempts at economic intervention were ineffective, such as loan schemes and the Smoot-Hawley Tariff Act which worsened global trade.

Franklin D. Roosevelt's New Deal

• Elected in 1933, introduced "The New Deal" for economic relief, reform, and recovery.
• The Public Works Administration created jobs through building projects.
• The New Deal was controversial but introduced enduring reforms like the Wagner Act and Social Security Act.
• Some measures declared unconstitutional, but FDR’s reforms were pivotal.

Economic Theories and Debates

• John Maynard Keynes advocated for government intervention and spending to stimulate the economy.
• Debates continue over the effectiveness of government intervention during economic crises.

Conclusion: The End of the Great Depression

• WWII created economic stimulus, effectively ending the Depression.
• Many of FDR’s policies remain to prevent future financial irresponsibility.
• The Great Depression remains a unique and unparalleled economic disaster in modern history.