The Great Depression: dates and causes

​​In a nutshell

The Great Depression was a period of an unstable economy due to the unequal distribution of wealth during the 1920s and the Wall Street Crash in 1929.

An Economic Disaster

In 1929 the Wall Street Crash marked the beginning of one of the worst economic crises in the USA that impacted the rest of the world. Between 1924 and 1930, the United States and almost all of Europe enjoyed great economic conditions, however, most of this prosperity relied on American loans and markets that nearly disappeared in 1929. During the 1920s, money was distributed unequally between classes, and between USA and Europe; therefore, the lack of balance led to huge market crashes and a significant gap between the rich and the working class.

For an economy to function properly, total demand must be equal to total supply, in the 1920s, goods were produced but no longer sold, and credit was installed as a temporary solution which created an artificial demand for products people could not normally afford. Other industrial sectors that once were wealthy, also suffered economic decline such as the production of radios and automobiles, as well as, the agricultural sector which was already in ruins when the crisis started.

At the end of the decade, industrial production had fallen by more than 9%. In order to protect the nation's business, the US imposed higher trade taxes, and as a consequence, foreigners stopped buying American products. Unemployment increased to 5 million in 1930, stores were closed, factories were shut down, and banks crashed. In 1933, Franklin Roosevelt became president and established a project of economic development called 'New Deal' which included the National Recovery Act (1933), the Agricultural Adjustment Act (1933), the National Youth Administration (1935), the National Labor Relations Act (1935), and the Social Security Act (1935).

Britain and the wars

After WWI the Labour Party gained popularity and trade unions became more constant in trying to get better pay and conditions by holding strikes. In 1926, the General Strike took place due to the disputes between coal miners and mine owners. As a result, the North of England, South Wales, and central Scotland became depressed and poverty affected the population during the first half of the 20th century. 

The Great Depression impacted the US and Europe, however, during the second half of the decade the economy recovered and the situation started to improve. In 1931, the British Commonwealth was formalized by the Statue of Westminster as the end of the British Empire and equal status for all member states of the organization. During the 1930s, many significant changes occurred, such as the reduction of families due to birth control, a better distribution of population in the South and the North, fewer people living in center towns, and more people left for the suburbs. One of the most notable social changes was the boom in daily press sales, new newspapers appeared, for example, the Daily News, the Daily Chronicle, and in 1926 the British Broadcasting Corporation (BBC) was created.