Great Depression, in U.S. history, the severe economic crisis supposedly precipitated by the U.S. stock-market crash of 1929. Although it shared the basic characteristics of other such crises (see depression), the Great Depression was unprecedented in its length and in the wholesale poverty and tragedy it inflicted on society. Economists have disagreed over its causes, but certain causative factors are generally accepted. The prosperity of the 1920s was unevenly distributed among the various parts of the American economy—farmers and unskilled workers were notably excluded—with the result that the nation's productive capacity was greater than its capacity to consume. In addition, the tariff and war-debt policies of the Republican administrations of the 1920s had cut down the foreign market for American goods. Finally, easy-money policies led to an inordinate expansion of credit and installment buying and fantastic speculation in the stock market. The American depression produced severe effects abroad, especially in Europe, where many countries had not fully recovered from the aftermath of World War I; in Germany, the economic disaster and resulting social dislocation contributed to the rise of Adolf Hitler. In the United States, at the depth (1932-33) of the depression, there were 16 million unemployed—about one third of the available labor force. The gross national product declined from the 1929 figure of $103,828,000,000 to $55,760,000,000 in 1933. The economic, agricultural, and relief policies of the New Deal administration under President Franklin Delano Roosevelt did a great deal to mitigate the effects of the depression and, most importantly, to restore a sense of confidence to the American people. Yet it is generally agreed that complete business recovery was not achieved and unemployment ended until the government began to spend heavily for defense in the early 1940s.

Longest and most severe economic depression ever experienced by the Western world. It began in the U.S. soon after the New York Stock Market Crash of 1929 and lasted until about 1939. By late 1932 stock values had dropped to about 20percnt of their previous value, and by 1933 11,000 of the U.S.'s 25,000 banks had failed. These and other conditions, worsened by monetary policy mistakes and adherence to the gold standard, led to much-reduced levels of demand and hence of production, resulting in high unemployment (by 1932, 25–30percnt). Since the U.S. was the major creditor and financier of postwar Europe, the U.S. financial breakdown precipitated economic failures around the world, especially in Germany and Britain. Isolationism spread as nations sought to protect domestic production by imposing tariffs and quotas, ultimately reducing the value of international trade by more than half by 1932. The Great Depression contributed to political upheaval. It led to the election of U.S. Pres. Franklin Roosevelt, who introduced major changes in the structure of the U.S. economy through his New Deal. The Depression also advanced Adolf Hitler's rise to power in Germany in 1933 and fomented political extremism in other countries. Before the Great Depression, governments relied on impersonal market forces to achieve economic correction; afterward, government action came to assume a principal role in ensuring economic stability.

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