the great depression
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The Great Depression was a severe worldwide economic depression in the decade prior to World War Two. The timing of the Great Depression varied across nations, but in most countries it started in late 1929 and lasted until the late 1930s or middle 1940s. It was the longest, deepest, and most widespread depression of the 20th century. Problems had been developing in the world economy since at least the mid-1920s, and in October 1929 the New York stock exchange collapsed. By the end of December 1929, $40 billion had been wiped off the value of US shares. Many shareholders, stockbrokers and business owners lost everything. The effects of the crash spread rapidly. Millions of people lost their jobs and the world was plunged into its worst crisis since World War 1. This was the Great Depression and for many people it was worse than the war.
What caused the Great Depression?
Two problems arose from the enormous growth in production of goods and prices of shares in the United States during the 1920s. Firstly, companies produced more goods than they could sell, while most Americans were too poor to buy them and many products could not find foreign markets. The second problem was that investors used borrowed money to buy shares, expecting to sell them for quick profits when share prices rose. By the late 1920s this had caused share prices to reach unrealistic levels. When investors lost confidence, their prices collapsed. The result was a huge fall in demand for goods and services, so production was cut and employees were sacked. As unemployment spread, people spent less and more jobs were lost. Banks closed and poverty spread rapidly and devastatingly. Because the US was the most important centre of the world economy, the depression quickly spread to other countries.
The Great Depression in Australia:
Australia had not had a booming economy like that of the US during the 1920s, but it still was among the nations that was hardest hit by the Depression. Australia's prosperity was based mainly on high prices for increasing exports of primary products and the inflow of foreign investment. But Australia owed a large and increasing amount of interest to overseas lenders (foreign debt). Any big fall in exports or any reduction of overseas loan funds would cause problems. When the Depression struck, world prices of primary products collapsed and loan funds dried up. With loans no longer available to pay for public works and construction projects, many workers lost their jobs and spiralled into poverty and despair. Because the Depression was a world problem, Australian governments felt powerless to end it. They began spending less to help cope with the issue, but as goverments cut spending, more workers lost their jobs, people had less money to spend and the situation worsened. At first the United States followed a similar course of austerity, but under President Roosevelt's 'New Deal' the US expanded welfare and funded public works programs that helped the country to recover.
What caused the Great Depression?
Two problems arose from the enormous growth in production of goods and prices of shares in the United States during the 1920s. Firstly, companies produced more goods than they could sell, while most Americans were too poor to buy them and many products could not find foreign markets. The second problem was that investors used borrowed money to buy shares, expecting to sell them for quick profits when share prices rose. By the late 1920s this had caused share prices to reach unrealistic levels. When investors lost confidence, their prices collapsed. The result was a huge fall in demand for goods and services, so production was cut and employees were sacked. As unemployment spread, people spent less and more jobs were lost. Banks closed and poverty spread rapidly and devastatingly. Because the US was the most important centre of the world economy, the depression quickly spread to other countries.
The Great Depression in Australia:
Australia had not had a booming economy like that of the US during the 1920s, but it still was among the nations that was hardest hit by the Depression. Australia's prosperity was based mainly on high prices for increasing exports of primary products and the inflow of foreign investment. But Australia owed a large and increasing amount of interest to overseas lenders (foreign debt). Any big fall in exports or any reduction of overseas loan funds would cause problems. When the Depression struck, world prices of primary products collapsed and loan funds dried up. With loans no longer available to pay for public works and construction projects, many workers lost their jobs and spiralled into poverty and despair. Because the Depression was a world problem, Australian governments felt powerless to end it. They began spending less to help cope with the issue, but as goverments cut spending, more workers lost their jobs, people had less money to spend and the situation worsened. At first the United States followed a similar course of austerity, but under President Roosevelt's 'New Deal' the US expanded welfare and funded public works programs that helped the country to recover.
Living through the Depression:
Workers and the lower class of society suffered the most through the Depression. According to the 1933 census, 400,000 Australians were living in shantytowns in makeshift shelters of iron, canvas and other scrap materials. Many were destitute and desperate. At first the governments relied on charities to deal with the poverty that arose, but charities could not deal with the amount of people that were homeless and hungry as result of the economic downturn. Banks began evicting famers that could not meet their loan repayments and unemployed workers were further humiliated by queuing up for dole payments that was well below the basic wage in which they had been earning. As a result, families struggled to put food on the table, put a roof over their heads, crime increased and the overall well-being of the population decreased immensely. Governments began to put in place measures to deal with this crisis, such as NSW Labor premier Jack Lang, who unsuccessfully proposed that Australia should temporarily halt interest payments to British as a means of helping the poor. He was, however, accused of being disloyal to Britain by other government ministers. Such acts of support were not enough to significantly transform the dire situation at hand. In these desperate times people banded together to help each other and joined demonstrations to protest against unemployment and evictions. But most felt a terrible sense of helplessness during this period. The Great Depression was most definitely a desperate and miserable time for most. |
QUESTIONS
1) Explain what the following terms mean:
a) unemployment
b) austerity
c) welfare
2) Roosevelt believed that austerity is not the way to fix economic/social issues. Do you agree? Why/Why not?
3) a) What problems were caused in the United States during the 1920s by overproduction of goods?
Draw a mind map showing how each problem associated with the collapse led to further problems.
4) What can you tell about the crash of October 1929 from [Source 1]?
5) Refer to [Source 2] to describe the trends in Australian unemployment between 1928 to 1933? Compare it to now.
1) Explain what the following terms mean:
a) unemployment
b) austerity
c) welfare
2) Roosevelt believed that austerity is not the way to fix economic/social issues. Do you agree? Why/Why not?
3) a) What problems were caused in the United States during the 1920s by overproduction of goods?
Draw a mind map showing how each problem associated with the collapse led to further problems.
4) What can you tell about the crash of October 1929 from [Source 1]?
5) Refer to [Source 2] to describe the trends in Australian unemployment between 1928 to 1933? Compare it to now.