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What Were the Effects of the Great Depression?

Men like Adolf Hitler and Benito Mussolini used the effects of the Great Depression to strengthen their powers in their countries.
Many families found themselves in poverty during the Depression.
People went without enough food and struggled to find work during the Great Depression.
Under President Franklin Delano Roosevelt, the federal government took on more regulatory powers in response to the Great Depression.
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  • Written By: Nicholas K.
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  • Last Modified Date: 10 July 2014
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The Great Depression was an economic downturn in the 1930s that affected consumers and businesses worldwide. Among the effects of the Great Depression was an increasingly difficult life for the average person, including food shortages and unemployment. This economic crisis also yielded changes in international economics, like an end to the gold standard and lower trade barriers. Another result was an increase in social welfare programs by national governments. The rise of reactionary governments in Europe and Asia was also one of the effects of the Great Depression.

The stock market crash of 1929 that started the Depression led to the closure of businesses around the world. These businesses shut their doors due to decreased demand for their products. Companies that remained open were often operating at only fractions of their productive capacities in the 1930s. The effects of business closures were increased unemployment and decreased household wages, and this downturn in household spending meant food shortages and a decreased quality of life for children. Governments throughout the world adjusted their financial policies.

The United States and its European allies began to coordinate trade policies to eliminate heavy taxes on imported products. This uniformity in policy was designed to open up international trade once the crisis subsided. The gold standard that had ensured financial security in previous decades was halted temporarily. This policy change allowed governments to issue more currency without the constraints of gold supplies.

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One of the major effects of the Great Depression was the adoption of aid programs by national governments to offset the economic downturn. The United States took the lead under President Franklin Roosevelt with his New Deal policies. This set of public programs established in 1933 were responsible for creating millions of jobs, supporting struggling farmers, and creating a retiree pension fund. European nations had adopted social welfare programs following World War I, but increased funding during the Great Depression. These aid efforts were replicated following the second World War with new constitutions in Italy, Germany, and Japan.

The struggles of people worldwide led to the rise of reactionary governments in places hit hard by the Great Depression. Benito Mussolini had assumed power over Italy in the early 1920s, but used the effects of the Great Depression to strengthen his position. Germany evolved from a nation led by democratically elected leaders in 1920 to an authoritarian state led by Adolf Hitler in 1933. Hitler's Nazi Party blamed foreign nations and European Jews for the economic problems faced by Germany in the Depression. The Japanese Empire took advantage of frustration among its citizens over the Depression to expand into China after 1931.

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Discuss this Article

Physics
Post 7

I actually am currently doing a project concerning the Great Depression. This article provides most of the basic information I will need.

ShadowGenius
Post 4

@GigaGold

I agree that taking risks is important, but there is a big difference between faith and delusion. Faith is a calculated and ambitious risk, delusion is based on a false image and blind optimism. We should have faith in our economy, but not at the point of throwing scruple out the window.

GigaGold
Post 3

@BioNerd

If people did not take risks there would be no businesses started. If people did not have faith in the economy, nobody would be able to have new ideas and there would be strict limitations on where we could go. I think that keeping confidence is important.

BioNerd
Post 2

The issue of the American economy seems to have a good psychological analogy. Before our depressions we have unlimited faith in our system and are willing to take ridiculous risks. This is like the onset of mania before depression in bipolar disorder. As the leading economy in the world, we have the responsibility to curb such irresponsible behavior.

Leonidas226
Post 1

Many jobs were created by President Roosevelt during the Great Depression which today may seem kind of useless. The CCC, or civilian conservation corps, was established to create many kinds of environmental jobs for preservation of the wilderness. In salt marshes and other areas of the country, you can still find criss-crossed canals which were constructed by the CCC in massive employment projects. This seemingly silly strategy helped to generate a lot of state-driven income.

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