A 1929 crash became a decade-long global economic freefall
The Great Depression was a severe worldwide downturn from nineteen twenty-nine to nineteen thirty-nine, marked by mass unemployment and poverty, collapsing industry and trade, and cascading bank and business failures. Contagion began in the United States—then the world’s largest economy—with the Wall Street crash oft taken as the starting gun.
It followed the Roaring Twenties’ boom, when profits flooded into speculation and inequality widened while lightly regulated banks lent freely. By nineteen twenty-nine falling spending already cut manufacturing and raised joblessness even as share prices kept climbing. Between nineteen twenty-nine and thirty-two world GDP fell an estimated fifteen percent; US GDP shrank about thirty percent. Recoveries diverged: the US, Germany, and Japan improved by mid-decade, while France lagged.
Causes remain disputed. Some historians blame the crash itself; others call it a symptom of late-twenties trends already underway; later views give monetary policy a larger role. After the Dow slid from three hundred eighty-one to one hundred ninety-eight in two months, optimism briefly returned—the index hit two hundred ninety-four in April nineteen thirty before grinding down to forty-one in nineteen thirty-two.
Governments and firms still spent more in early nineteen thirty than a year earlier, but consumers who had lost paper wealth cut outlays by about ten percent. From the mid-thirties a severe drought ravaged America’s agricultural heartland. The Depression thus braided finance, policy, weather, and psychology into a global shock that redefined what “normal” economies could fail to deliver.
The crash itself unfolded over a few brutal days: shares dropped 11 percent at the opening bell on Black Thursday, 24 October 1929, and a further 12 percent on Black Monday. Between September 1929 and 8 July 1932 the market shed 85 percent of its value. Banking panic followed in December 1930 with a run on the privately owned Bank of United States; of the $550 million in deposits lost when 608 American banks shut that November and December, it held a third. Washington's answer, the Smoot–Hawley Tariff of 17 June 1930, provoked retaliation abroad, and by 1933 world trade had shrunk to one-third of its 1929 level. Countries that abandoned the gold standard could cut interest rates and let their currencies fall, giving them the best tools to fight back.
Source: Great Depression
