Tumbling Down of the Economic Base - The Great
Depression of 1929
In the current day, the US Dollar to Indian
rupees conversion rate creates an impression
that the stable and growing economic system
in the United States is invincible and can
never get affected even if the global market
is facing a blow.
However, if we look back into the past century,
to be particular in the late 1920s, we cannot
really come to the conclusion that the US
Economy is perfect and invincible.
This major event in history is known as the
Great Depression.
Before delving deep, it is important to know
what really happened which led to this mishap
in the history of the United States.
After the end of the First World War, the
United States emerged as the victorious and
at the beginning of the 1920s, there was a
rapid industrial growth in the United States
followed by the invention of several new electronic
gadgets.
This boosted the rate of employment and the
salaries were also pretty high.
People were having a good amount of money
to invest in the banks and they also started
investing in the stock market as the returns
were lucrative.
Stock market becomes so popular that people
started to take a loan from banks to invest
in the stock market.
From 1922 to 1929, the investments were up
by 218% which never happened before.
Everything was going great so far but life
in the US dreamland was soon to be tumbling
down.
The companies overestimated their growth by
seeing the buying power of the market and
started to produce more.
However, the people were investing more and
were not buying many things, which was followed
by inflation.
Inflation is never good for any market.
The wages started to fall down, many people
lost their jobs.
People who were taking debts from the banks
now had to pay higher interest rates.
The series of negative events reached its
peak on October 24, 1929, which was called
The Black Thursday as this marked the beginning
of the Great Depression.
The prices of the stocks fell down heavily
and people started to sell out their stocks
as soon as the market opened the next day
and on 29th of October a record-breaking 16.4
Million shares were sold and the market lost
around 15 Billion Dollars on that single day
which highly affected the economy of the country.
The market value of dollar became almost nothing
as people started making kites out of the
dollar bills.
Unemployment reached its highest in the history
of the United States as almost 25% of the
people were out of jobs.
It can be said that the Great Depression was
the worst economic turndown in the 20th Century.
However, it was not only that the United States
was affected by this depression but due to
rapid globalization, there was a huge impact
in the markets of the entire world.
The stock prices fell down severely.
On the negative side, it led to the rise of
Hitler and his Third Reich.
Losing faith in the other powers, the people
in Germany were convinced that Hitler was
their supreme leader and the Nazi party became
stronger, ultimately leading to the war in
1939.
However, this war was a boon in disguise as
it created job opportunities in the US, especially
in the military and the ammunition industry.
By the time of the end of the war, the market
in the United States was becoming stable and
things were getting normal.
The then president of the US, Franklin D.
Roosevelt created a Security Exchange Commission
and also an insurance corporation to ensure
that this event is never repeated in the future.
This event of the Great Depression might not
happen in the United States ever again but
has taught a significant lesson to all of
us that no one is invincible.
