The great depression:

The great depression: its causes and impact on Africa

The Meaning and Characteristics of the Great Depression

Explain the meaning and characteristics of the great depression

The great depression generally refers to the economic crisis which occurred between 1929 and the 1930s during the period of inter war between the world's super powers.

It can also be described as an economic disaster which spread throughout Europe following the collapse of the New York stock exchange in Wall Street on 19 October 1929.

In Britain it was called "the slump‟ and in German "Die Krise‟ (the crisis) and Americans used the term "great depression‟. The great depression began when the stock exchange crashed in 19 October 1929 and depositors feared bankruptcy and rushed to withdraw their deposited cash.

Characteristics of the Great Depression

Hyper inflation (high depression of money) facilitated to the collapse of economies.

Mass unemployment: The official figures are impressive, peaking at around 6 million unemployed in Germany, 14 million in the United States and 2.7 million jobless in Britain due to poor economic activities.

Social tensions increased considerably: With a rising intolerance towards groups or individuals who were perceived to be "economic rivals‟ or "outsiders,‟ many people began to blame their neighbors due to the economic collapse.

Low purchasing power:People were unable to buy food and other necessities due to poor economic activities.

Protectionism: Protectionism is the economic policy of restraining trade between nations through methods such as tariffs and government regulations. Preventing commodities from other nations was applied as a way to prevent depression.

Starvation famine and malnutrition related diseases:The depression took a heavy toll on the physical and mental health of European society. In Hamburg, for example over 50% of the young men were unemployed for more than two years and they were especially hard-hit psychologically.

Low production of industrial goods and steady fall of prices.

Closure of financial institutions like banks due to poor economic activity.

The wide spread of economic depression in the world, except for Russia.

It heightened gender divisions: In some cases married women workers were forced from the work place by state legislation in a campaign against so called "double earners‟ because their husbands also brought home a wage.

Domestic politics became increasingly turbulent: This was due to the government's failure to combat the depression effectively in much of central and eastern Europe and the Weimer Republic.

Widespread Malnourishment: Its effects on national health were long lasting. In the mid 1930s a routine medical inspection identified over 21% of school children in Pontypridd, Wales as malnourished.

The Causes of the Great Depression

Analyse the causes of the great depression

First world war of 1914, this war created an economic vacuum, whereby during the war many European countries were incurring high war expenditure while no production thus after the war the European nations wanted to compensate the gap of production that occurred during the period, which led to over production hence low prices in agricultural and industrial products.

Hence low investment which led to mass unemployment that brought low purchasing power that leads to poor welfare like famine starvation and death thus great depression.

Multi distribution of capitalist’s economy or uneven distribution of national economy in the capitalist’s nations. Whereby in pure capitalist‟s nations it‟s only few individuals that happen to own and control production for instance in U.S.A by the time of great depression it was only 5% of the population that owned the economy.

Unlike in socialism economy thus any withdraw of such people from the investments it affect the entire economy thus the fall of New York stock exchange in 1929 led to the investors to withdraw their money from the stock market which led to the economic depression of 1930‟s.

Heavy loans during the fighting, heavy debts from USA to France and Britain were acquired to facilitate the war even after the war more debts were got from USA like financial loan to construct the war damaged European nations, the results was when the pressure to repay loans and interests became greater particular in Europe, it created an economic situation whereby huge sum of money begun flowing from Europe to USA.

This destroyed international trade, thus Europeans nations couldn‟t develop but all of them depending on USA thus any problem on USA economy had to affect the entire world.

War indemnity of Germany and senseless circle payments, Germany was asked to pay huge indemnity or repatriation of 6.5 billion dollars to the victor power first of all this amount of money was too huge for Germany which had just come from war that led to inflation and created senseless circle payments.

Germany acquired loan from USA as to pay Britain and France who wanted to repay the loans from USA, who borrowed Germany thus a senseless circle payments that anything that would affect USA economy would affect the entire world economy hence the collapse of New York stock exchange led to great economic depression.

The collapse of new York stock exchange on 19th October 1929, this was the immediate cause of the great depression, many investors in USA and outside USA had invested a lot in USA stock exchange the fall of the prices of shares, made the investors to withdraw their shares which led to low investment that led to closure financial institutions like banks, and credit facilities, hence great depression.

Absence of international institutions like IMF and World Bank which would have acted as advisors and regulators of economic and financial issues in the world, like controlling inflation production, scarcity and financial regulation. Thus its absence in 1930‟s led to great economic depression

Over production of agriculture and industrial products, after the first world war that period was characterized with over production of agriculture and industrial output both in the periphery and in the metro pole, this led to the fall of prices of output of industrial and agriculture, which discouraged production in the long run, thus great economic depression.

Political instabilities during inter war period, this period did not enable many European nations to engage into commodity production and international trade, it left a little time for European and USA to engage in economic activities which led to poor planning that culminated into economic slump.

Bolshevik revolution of 1917, after undergoing the revolution Russia begun to under go command and central controlled economy, which narrowed the world market that led to the piles of goods without market from America and in western European nations, hence economic great depression.

Poor economic policies like protectionism, were also responsible for great economic depression e.g. USA during the inter war period practiced and pursued discriminative economic policy against world economies she passed the „Mc Cumber tariff‟ in 1922 to shelter her economies against imports of nation wishing to export more goods

The collapse of the Austria, as she was providing loans to the European nations but collapsed in may 1931 due to the withdraw on the French funds the financial crisis was intensified in Europe.

The recovery program after world war one, the European nations begun to discriminate the USA goods, and begun the recovery of agriculture sector which led to the discriminating of agriculture products in USA that resulted the pile of goods because of fewer buyers this affected the production and that marked the beginning of the great depression.

The Impact of the Great Depression on Africa

Assess the impact of the great depression on Africa

Fall of price commodity, it led to the fall of African cash crops tremendously like cotton, coffee, sisal and cocoa because the demand at the metro pole was also very low the peasants and European settlers who were the chief producers of such commodities almost abandoned the production.

Decline in provision of social services, whereby the colonial government was no longer interested in the investment of social services because of severe social crises in Europe.

Establishment of processing industries, like coffee, cotton ginneries an oil refinery as to increase the qualitative and quantitative output in the metro pole.

Intensive exploitation of african resources e.g. land alienation was doubled, new taxes were introduced, forced cropping was introduced and forced labour became a common place, this aimed at compensating the financial crisis that had affected their economy.

Regional imbalance, especially of transport network whereby railways lines and roads were constructed in areas where production was high and in places that there was no transport network

Provision of low wages, especially on colonial civil servants as to minimize colonial expenditures in the peripheries

Lay-offs / retrenchment that led to mass unemployment in many colonies because the colonial government reduced the number of workers so as to reduce colonial expenditure like teachers, nurses, clerks and others.

Development of migrant labourers, since colonial government increased plantation and labour reserves e.g. Rukwa, Kigoma and Dodoma in Tanganyika and northern Uganda as well.

Growth of food stuff, the crises contributed in putting more efforts in the production of food crops like cassava, banana, soy bean, potatoes and millet because cash crops had fallen in prices.

Increase in the import industrial commodities in the peripheries as to decrease the stock piles in the metro pole that had lacked the market during the period of severe economic crisis.