What caused the Great Depression, and what were its consequences?

Like the Great War, the Great Depression must be spelled with capital letters. Beginning in 1929 an exceptionally long and severe economic depression struck the entire world with ever-greater intensity, and recovery was uneven and slow. Only the Second World War brought it to an end.

The social and political consequences of prolonged economic collapse were enormous and were felt worldwide. Economic depression was a major factor in Japan’s aggressive empire building and militarism in the 1930s. Elsewhere in Asia, as well as in Latin America and Africa, agricultural depression devastated millions of peasants and small farmers. Western markets for raw materials dried up, and prices collapsed. Urban workers faced pay cuts and high unemployment. In West Africa anticolonial nationalism attracted widespread support for the first time in the 1930s, setting the stage for strong independence movements after World War II.

In Europe and the United States the depression shattered the fragile political stability of the mid-1920s. Mass unemployment made insecurity a reality for millions of ordinary people. In desperation, people looked for new leaders who would “do something.” They willingly supported radical attempts to deal with the crisis by both democratic leaders and dictators. Leaders espousing alternatives to free-market capitalism, such as fascism and communism, gained massive popular support.