great economic derpressions
DESCRIPTION
Descriptions about some of the major economic depressions of the worldTRANSCRIPT
Great Economic Depressions
Causes and Effects
Group Members Name of the member Roll Number
Himanshu Phatnani 54
Atharva Ponkshe 55
Yogesh Prajapati 56
Tarun Rohra 57
Sumit Sabhasandasani 58
What is Recession then?
• An economic contraction when GDP declines for two consecutive quarters
• much frequent than economic depressions
• much easier to deal with!
Notable Economic Depressions
• Panic of 1837 (1837 – 1845)• Long Depression (1873 – 1896)• The Great Depression (1929 – 1945)• Greek Depression (2009 - Present)
Panic of 1837• Causes : Domestic :Speculative lending practices in western statesSharp decline in cotton pricesBanks Stopped taking payments in Gold and
silver
International :International specie flowRestrictive lending practices in Great Britain
Effects
• It’s effect lasted for 5 years from 1837-1842• New Jersey and Delaware districts were reported to
have greatest stress of the panic• Within two months the losses from bank failures in
New York alone aggregated nearly $100 million• Out of 850 banks in the United States, 343 closed
entirely, 62 failed partially• Unemployment touched the entire nation during this
period
Long Depression
Causes• Boom in railroad
construction
• Large infusion of cash in speculative railroad industry
• 1873 coinage act reduced domestic money supply
Effects• Involvement of capital in
projects provide no early returns
• Increase in interest rates thereby hurting farmers
The Great Depression
• the longest, deepest, and most widespread depression of the 20th century
• The depression originated in the U.S., after the fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929.
THE GREAT DEPRESSION :
CAUSES
Stock Market Crash 1929
Bank Failures
Drought Conditions
American Economic Policy with Europe
Reduction in Purchasing Across the Board
Stock Market Crash 1929 • Black Tuesday, October 29, 1929.
• Stockholders lost more than $40 billion dollars.
• By the end of 1930, America truly entered what is called the Great Depression.
• Dow Jones industrial average dropped over 12%.
• Result of mass panic selling of stocks, causing prices to plummet .
• Flood of sell orders provided stock prices to traders.
Bank Failures
Reduction in Purchasing
• Throughout the 1930s over 9,000 banks failed.
• People who had their life savings in the banks – lost their money.
• Individuals from all classes stopped purchasing items.
• Reduced Production leading to reduction in Workforce.
• Unemployed were unable to pay installments on their items, which were ultimately repossessed.
• Unemployment rate rose above 25%.
American Economic
Policy
• Government created the Smoot-Hawley Tariff in 1930.
• Charged a high tax for imports thereby leading to less trade between America and foreign countries.
Drought Condition
s
• Drought occurred in the Mississippi Valley in 1930.
• People could not even pay their taxes or other debts . • Forced to sell their farms for no profit to themselves.• The area was nicknamed "The Dust Bowl."
Economical Effects
World-wide economy collapse
Decrease in International trade by 30%
30 million people were unemployed around the world.
Political Consequences
Fascism and militarism
Totalitarian communism
Welfare capitalism
• Increase in Crime rate.• No Professional Education.• Migration of people for better standard of
living.• Formation of labour unions.
Social and Cultural Effects
Greek Depression
• Also known as ‘ Eurozone crisis’• a group of 10 central and eastern European
banks asked for a bailoutCauses : Globalization of finance Easy credit conditions during the 2002–2008 International trade imbalances Poor fiscal policy choices
How to deal with the problem?
• Creation of the common treasury for Eurozone nations
• The ECB would direct the banks to maintain their credit lines and outstanding loans, while closely monitoring risks taken for their own accounts.
Yes..There are more solutions!!
• The ECB would enable countries such as Italy and Spain to temporarily refinance their debt at a very low cost
• These steps would calm the markets and give Europe time to develop a growth strategy
Thank You!Questions??
Sources
• Wikipedia• http://blogs.ft.com/• http://www.digitalhistory.uh.edu/• http://americanhistory.about.com/