Why this matters now
The Depression is examined for its causes, the New Deal response, and its role in the rise of fascism and the rethinking of economics (Keynes) — a pivotal event of the interwar period.
The Wall Street Crash
After the boom of the 1920s, the US stock market crashed in October 1929. Banks failed, businesses collapsed and unemployment soared. The crisis spread across the interconnected world economy into a prolonged global depression.
Causes
Key causes included over-production and under-consumption, rampant stock-market speculation on easy credit, weaknesses in the banking system, and the fragile post-WWI international economy (war debts, the gold standard, protectionism).
Response and impact
In the US, President Franklin D. Roosevelt’s “New Deal” used government spending and public works to revive the economy and provide relief — a practical turn toward state intervention later theorised by John Maynard Keynes. Elsewhere, economic misery and mass unemployment fuelled the rise of fascism and Nazism, helping pave the way to World War II.
UPSC angle
Know the 1929 Wall Street Crash, the causes (over-production, speculation, weak banking), the New Deal (Roosevelt) and Keynesian rethinking, and the link to the rise of fascism.
Frequently asked questions
What started the Great Depression?
The Wall Street Crash of October 1929, which triggered bank failures, business collapses and mass unemployment that spread worldwide.
What were the causes of the Great Depression?
Over-production and under-consumption, stock-market speculation on easy credit, banking weaknesses, and a fragile post-WWI world economy.
What was the New Deal?
US President Franklin Roosevelt’s programme of government spending, public works and relief to revive the economy.
How did the Great Depression contribute to World War II?
The economic misery and unemployment it caused fuelled the rise of fascism and Nazism, contributing to the outbreak of the war.