E xperiences of the Depression

Experiences of the Depression

What is a Depression? An economic depression is a deep and extended slump in total business activity. The main characteristics of a depression are high levels of unemployment, low levels of production and declining income and profits.

Wall Street- the crash that shook the world The Great Depression; the largest economic crisis in modern world history. The impact of this world economic collapse was first felt in the USA and was marked by:

When was the Great Depression? The Great Depression began in October 1929 and continued for nine years when it finally ended in 1938 with the outbreak of World War Two.

The Wall Street crash, 24 October 1929, was the beginning of the Great Depression. ‘Black Thursday’ because it shattered the US economy; the most prosperous and confident country. • ‘Black Monday’ 28 October, the value of shares fell even further. The collapse spread panic abroad. • President Hoover tried to assure the crisis would quickly pass. However, the Great Depression would last for close to 10 years and strike at nearly every country in the world. • Australia owed Britain and America millions of dollars and so was hard hit by the economic chaos.

A photograph of the scene outside the Wall Street Stock Exchange during the crash of 1929

Causes of the Great Depression • Economic dependence: • Heavy borrowing of funds from overseas to finance development (e.g. non-productive public works) • After Germany Australia had the second largest debt in the world • The money from overseas that Australia depended on, began to dry up after 1928. • The London lenders began to lose fairth in the Australian market and refused to lend more money. • The Australian government borrowed more money to pay off short term loans.

Lack of secondary primary industry • Australian depended almost exclusively on the sale of primary products (i.e. wheat and wool). • Prosperity and over confidence • Australia’s share of winning the war • People moved from the country to the cities in pursuit of higher wages and better facilities. • Many of the land settlement schemes were badly planned. • Stock Market crash (29 October, 1929) • USA is dominant of economic power at end of WW1 • Many of australia’s loans originated in London (relied on one source) • When the world was hit by the stock crash so was Australia!

The Depression experience in Australia In January 1929, Australia’s long-term borrowing from overseas came to an end when London refused further loans. In the months before the Wall Street Crash, problems with the Australian economy were evident: • Australian shares values were falling • Unemployment levels rose • Selling price of Australian agricultural produce was falling on the world market.

During the 1920s State governments borrowed large amounts of money to finance public works programs in cities and rural areas. • By 1929, Australia had huge debts and interest repayments. • Australia became dependent on overseas loans and investment for prosperity and growth, and relied on agricultural and industrial exports for national income. • Even without the crash on Wall Street, Australia faced uncertain times in 1929. The consequences of the world economic crisis would be catastrophic for Australia

E xperiences of the Depression