Making of a Global World 4.2 Flashcards
brief the great economic depression
The Great Depression began around 1929 and lasted till the mid1930s. During this period most parts of the world experienced
catastrophic declines in production, employment, incomes and
trade. The exact timing and impact of the depression varied
across countries. But in general, agricultural regions and communities
were the worst affected. This was because the fall
in agricultural prices was greater and more prolonged than that
in the prices of industrial goods
the depresssion was a combination of several factors. expiain
The depression was caused by a combination of several factors. We
have already seen how fragile the post-war world economy was.
- First: agricultural overproduction remained a problem. This was
made worse by falling agricultural prices. As prices slumped and
agricultural incomes declined, farmers tried to expand production
and bring a larger volume of produce to the market to maintain
their overall income. This worsened the glut in the market, pushing
down prices even further. Farm produce rotted for a lack of buyers. - Second: in the mid-1920s, many countries financed their investments
through loans from the US. While it was often extremely easy to
raise loans in the US when the going was good, US overseas lenders
panicked at the first sign of trouble. In the first half of 1928, US overseas loans amounted to over $ 1 billion. A year later it was one
quarter of that amount. Countries that depended crucially on US
loans now faced an acute crisis.
how much did the depression affect other countries/
The withdrawal of US loans affected much of the rest of the world,
though in different ways. In Europe it led to the failure of some
major banks and the collapse of currencies such as the British pound
sterling. In Latin America and elsewhere it intensified the slump
in agricultural and raw material prices. The US attempt to protect
its economy in the depression by doubling import duties also dealt
another severe blow to world trade
The consumerist prosperity of the 1920s now
disappeared in a puff of dust. expalin
The US was also the industrial country most severely affected by
the depression. With the fall in prices and the prospect of a
depression, US banks had also slashed domestic lending and
called back loans. Farms could not sell their harvests, households
were ruined, and businesses collapsed. Faced with falling
incomes, many households in the US could not repay what they had
borrowed, and were forced to give up their homes, cars and other
consumer durables.
how else was us affected by its own depression
As unemployment soared, people
trudged long distances looking for any work they could find.
Ultimately, the US banking system itself collapsed. Unable to
recover investments, collect loans and repay depositors, thousands
of banks went bankrupt and were forced to close. The numbers
are phenomenal: by 1933 over 4,000 banks had closed and
between 1929 and 1932 about 110, 000 companies had collapsed.
how was recovery from depression
By 1935, a modest economic recovery was under way in most
industrial countries. But the Great Depression’s wider effects on
society, politics and international relations, and on peoples’ minds,
proved more enduring
how did the depression affect indian trade>?
In the nineteenth century, as you have seen, colonial India had become
an exporter of agricultural goods and importer of manufactures.
The depression immediately affected Indian trade. India’s exports and imports nearly halved between 1928 and 1934. As international
prices crashed, prices in India also plunged. Between 1928 and 1934,
wheat prices in India fell by 50 per cent.
who were most hit by the depression?
Peasants and farmers suffered more than urban dwellers. Though
agricultural prices fell sharply, the colonial government refused to
reduce revenue demands. Peasants producing for the world market
were the worst hit.
explain the jute growers?
r the jute producers of Bengal. They grew raw jute that was
processed in factories for export in the form of gunny bags. But
as gunny exports collapsed, the price of raw jute crashed more than
60 per cent. Peasants who borrowed in the hope of better times or
to increase output in the hope of higher incomes faced ever lower
prices, and fell deeper and deeper into debt. Thus the Bengal jute
growers’ lament:
how was peasants debt in india?
Across India, peasants’ indebtedness increased. They used up their
savings, mortgaged lands, and sold whatever jewellery and precious
metals they had to meet their expenses. In these depression years,
India became an exporter of precious metals, notably gold.
what did economist say
The famous economist John Maynard Keynes thought that Indian
gold exports promoted global economic recovery. They certainly
helped speed up Britain’s recovery, but did little for the Indian peasant.
Rural India was thus seething with unrest when Mahatma Gandhi
launched the civil disobedience movement at the height of the
depression in 1931.
for whome was the depression unaffecting? or even better?
The depression proved less grim for urban India. Because of falling
prices, those with fixed incomes – say town-dwelling landowners
who received rents and middle-class salaried employees – now found
themselves better off. Everything cost less. Industrial investment also
grew as the government extended tariff protection to industries,
under the pressure of nationalist opinion.
