Severe global downturn from 1929 to 1939

Summary

The Great Depression was a severe global economic downturn lasting from 1929 to 1939. It was marked by very high unemployment and poverty, sharp declines in industrial production and international trade, and widespread bank and business failures. The crisis began in 1929 in the United States after the Wall Street crash, then spread internationally through financial contagion and reduced confidence in the global economy. In the early years, falling spending and deflationary pressures worsened conditions: share values collapsed after October 1929, and confidence in the financial system deteriorated further by 1932. In the United States, unemployment rose dramatically (to about 25% by 1933), thousands of banks failed, and many farmers lost land. Policy responses varied by country—some governments pursued protectionism (including the Smoot–Hawley Tariff Act), which contributed to a collapse in world trade, while others were constrained by the gold standard, which helped transmit deflation internationally. Recovery began unevenly, with many countries starting to improve by the mid-1930s, and the downturn ultimately ended in 1939 as the outbreak of World War II stimulated production and employment.

Key Points

• 1

  The downturn (1929–1939) involved global unemployment, poverty, deflation, collapsing industrial output, and widespread bank and business failures.

• 2

  The crisis spread from the U.S. after the 1929 Wall Street crash, then intensified through reduced trade and financial instability across countries.

• 3

  Protectionist policies and gold-standard constraints helped deepen and prolong the depression, while recovery began at different times depending on national conditions and policy choices.