Leading you to the path of success .

Group Members:-Jia Tong-Ric-Evangeline-Sadman

Today we are

going to talk about

The Great Depression !!

What is ‘The Great Depression’?

• An economic recession that began on October 29, 1929, following the crash of the U.S. stock market. The Great Depression originated in the United States, but quickly spread to Europe and the rest of the world.

• It is the longest, deepest, and most pervasive depression in American history, lasted from 1929 to 1939. Its effects were felt in virtually all corners of the world, and it is one of the

great economic calamities in history.

The facts about the Great DepressionThe facts about the Great Depression

• The Great Depression took place from 1929 to 1939, starting with the US and spreading to the rest of the world

• During this time the prices of stock in the US fell 40%. 9,000 banks went out of business and 9 million savings accounts were wiped out.

• 86,000 businesses failed, and wages were decreased by an average of 60%. The unemployment rate went from 9% all the way to 25%, about 15 million jobless people.

What triggered this Depression?

• It was triggered by the stock market crash of October 29, 1929, a common misconception that this was the main cause of the Great Depression. Actually, Economists and historians are still debating the causes of the Great Depression.

• While we know what happened, we have many theories to explain the reason and for the economic collapse. Let us now look at some of them…

• A five-year bull market peaked on 3 September 1929. On Thursday 24 October, a record 12.9 million shares were traded, reflecting panic selling. On Monday 28 October, panicked investors continued to try to sell stocks; the Dow saw a record loss of 13%. On Tuesday 29 October 1929, 16.4 million shares were traded, shattering Thursday's record; the Dow lost another 12%.

Total losses for the four days: $30 billion, 10 times federal budget and more than the U.S. had spent in World War I ($32B estimated). The crash wiped out 40 percent of the paper value of common stock. Although this was a cataclysmic blow, most scholars do not believe that the stock market crash, alone, was sufficient to have caused the Great Depression.

Possible theory 1: Black Thursday (or Monday or Tuesday)

Possible theory 2: World War I

• The United States entered World War I late (1917) and emerged as a major creditor and financier of post-War restoration. Germany was burdened with massive war reparations (a political decision on the part of the victors, see the Treaty of Versailles). Britain and France needed to rebuild. US banks were more than willing to loan money. However, once US banks began failing ... the banks not only stopped making loans, they wanted their money back. This put pressure on European economies, which had not fully recovered from WWI, contributing to the global economic downturn.

Possible theory 3: Bank Failures

• In 1929, there were 25,568 banks in the United States; by 1933, there were only 14,771. Personal and corporate savings dropped from $15.3 billion in 1929 to $2.3 billion in 1933. Fewer banks, tighter credit, less money to pay employees, less money for employees to buy goods. This is the "too little consumption" theory sometimes used to explain the Great Depression but it, too, is discounted as being the sole cause.

How ‘The Great Depression’ affected the world?

• The psychological, cultural, and political repercussions of the Great Depression were felt around the world, but it had a significantly different impact in different countries. In particular, it is widely agreed that the rise of the Nazi Party in Germany was associated with the economic turmoil of the 1930s. No similar threat emerged in the United States.

Why did the depression cause less political change in the United States

than elsewhere?

• A much longer experience with democracy may have been important. In addition, a faith in the "American dream," whereby anyone who worked hard could succeed, was apparently retained and limited the agitation for political change.

Effects on individuals .

• Much of the unemployment experience of the depression can be accounted for by workers who moved in and out of periods of employment and unemployment that lasted for weeks or months. These individuals suffered financially, to be sure, but they were generally able to save, borrow, or beg enough to avoid the severest hardships.

• Federal, state, and local governments, as well as many private firms, introduced explicit policies in the 1930s to favor men over women for jobs. Married women were often the first to be laid off.

Cultural effects.

• One might expect the Great Depression to have induced great skepticism about the economic system and the cultural attitudes favoring hard work and consumption associated with it. As noted, the ideal of hard work was reinforced during the depression, and those who lived through it would place great value in work after the war. Those who experienced the depression were disposed to thrift, but they were also driven to value their consumption opportunities.

Political effects.• Not only did the government take on new responsibilities,

providing temporary relief and temporary public works employment, but it established an ongoing federal presence in social security (both pensions and unemployment insurance), welfare, financial regulation and deposit insurance, and a host of other areas. The size of the federal government would grow even more in the postwar period. Whether the size of government today is larger than it would have been without the depression is an open question.

EFFECTS OF G.D. ON EFFECTS OF G.D. ON SINGAPORESINGAPORE

• Trade and BusinessTrade and Business– America and Europe were the biggest buyers America and Europe were the biggest buyers

of tin and rubberof tin and rubber– Businesses trading in these commodities were Businesses trading in these commodities were

badly affected; many closed downbadly affected; many closed down

EFFECTS OF G.D. ON EFFECTS OF G.D. ON SINGAPORESINGAPORE

• Unemployment and HardshipUnemployment and Hardship– Government had to retrench workers and many Government had to retrench workers and many

suffered pay cutssuffered pay cuts– By 1931, one third of the population was By 1931, one third of the population was

unemployed.unemployed.

• Government’s Response– Passed a law in 1930 to restrict and reduce the Passed a law in 1930 to restrict and reduce the

number of immigrants coming to Singaporenumber of immigrants coming to Singapore– Arranged for large numbers of Indian and Chinese Arranged for large numbers of Indian and Chinese

to return hometo return home

EFFECTS OF G.D. ON EFFECTS OF G.D. ON SINGAPORESINGAPORE