Question

Explain the causes and consequences of the economic crisis of 1929.

Answer 1

There were following major reasons and consequences for the 1929 economic crisis.

Over Production : Due to the war of the First World War agricultural and industrial production was increased to meet extra demand. The production was also increased due to the advanced technological progress. The period of over production continued even after the war was over. The number of buyers in proportion to production was very low.

Debt Recovery By America : Many countries had taken American capitalists debt after the war to repair their press devastated economy. When there were some signs of American's domestic crisis, the American Capitalists started asking for the debt back. This put the country in trouble many banks sank. The value of the currency of many countries fell.

Collapsed Economic Nationalism : America took some protective measures in view of the crisis. He imposed double customs duty on imports. All the countries were trying to make most of the things they need on their own. This accumulated economic nationalism broke the back of the market based system of world trade.

The American capitalists started speculating in the money market instead of leading to Europe. This often caused Europe to lose its base on US debt. In the early stages, the advantage of the speculative market further enhanced this trend. Initially, due to the joining of people, the share prices were very high. But after sometime the share price with fell down equally fast. Thus, due to the above mentioned major reasons the world wide economic recession started in 1929 AD. Its impact was world wide.