The U.S. stock market experienced a sharp decline in values in 1929, marking the beginning of the Great Depression1. This event had a significant impact on the global economy, leading to severe deflation and unemployment. The crash followed a decade of economic growth and a bull market. The prices of stocks soared to fantastic heights in the great “Hoover bull market,” and the public rushed to invest their liquid assets or their savings in securities.

The economic downturn, which originated in the United States, caused drastic declines in output and severe unemployment in almost every country of the world. The gold standard played a key role in transmitting the American downturn to other countries. The Depression was particularly long and severe in the United States and Europe; it was milder in Japan and much of Latin America.

In response to the Great Depression, the U.S. government approved President Franklin Roosevelt’s New Deal, which provided funding for domestic programs like work relief for unemployed workers. The New Deal generally embraced the concept of a government-regulated economy aimed at achieving a balance between conflicting economic interests.

Economic instability led to political instability in many parts of the world. Political chaos gave rise to dictatorial regimes such as Adolf Hitler’s in Germany and the military’s in Japan. Dictators usually resort to force or fraud to gain despotic political power, which they maintain through the use of intimidation, terror, and the suppression of basic civil liberties.

The Great Depression lasted until the beginning of World War II in 1939. The economic conditions during the Depression influenced global politics and social conditions, setting the stage for major historical events such as WWII. The economic hardship and political instability during the Depression contributed to the rise of fascist leaders in Europe, leading to the start of the war. The war itself led to a significant shift in the global economy and marked the end of the Great Depression.