The Great Depression

The Great Depression^【1】 or the Great Depression (English: Great Depression) is the most significant economic crisis of the 20th century, which began in the United States of America (USA) in 1929 and quickly spread globally. The consequences of the 1929 World Economic Crisis extended beyond the economic sphere, producing major outcomes in political, social and cultural domains.

The Great Depression caused sudden and severe declines in both industrial production and employment, triggered a collapse in financial markets, led to widespread bank failures, and created profound disruptions in social structures.

Excessive Consumption Before the Economic Crisis

With the end of World War I, the United States experienced a major economic surge and social transformation, becoming a decisive actor in global politics and economics. Thanks to the financial support it provided to European states during the war, the USA emerged as the largest creditor nation in the world after the conflict. At the same time, it became the leading international lender and largely demanded repayment of war reparations in gold. These years are recorded in history as a period of extraordinary growth in economic expansion and lifestyle change. For this reason, the era is frequently referred to in literature as "The Roaring Twenties^【2】" (Roaring Twenties). This "roaring" signifies not only economic vitality but also changes in women’s social roles, the spread of consumer culture, the development of the entertainment industry, and the expansion of individual freedoms.

During this period, the concept of a "consumer society" began to be clearly observed for the first time. Americans from different regions started purchasing the same products, listening to the same music (especially jazz), and dancing in similar ways, leading to a cultural transformation. One of the most symbolic steps in this transformation was the widespread adoption of mass production. The modern assembly line system developed by Henry Ford in the automotive industry reduced production costs and made products more accessible. Under the leadership of Ford Motor Company^【3】 The number of automobiles across the country rose from six million to twenty-seven million, and the car transitioned from a luxury item to a staple of middle-class daily life.

Signs of the Economic Crisis

The economic prosperity of the 1920s in the United States changed not only production and consumption habits but also lifestyles. Travel and leisure, previously exclusive to the upper classes, became major economic activities as broader segments of the population flocked to resort areas due to these new consumption patterns, giving rise to the tourism industry.

Especially in Floridaprimarily among others^【4】 coastal regions, land and real estate prices soared dramatically. Even farmland was sold at exorbitant prices, and real estate speculation reached unprecedented levels. This speculation served as a harbinger of the economic crisis that would soon erupt.

Companies expanded rapidly, but this growth was largely based on artificial prosperity. Despite no significant increase in production levels, prices rose due to excessive demand and speculative investment, creating a widening gap between the economy’s fundamental indicators and its market value. By 1929, a decline in steel production and automobile manufacturing became evident, and layoffs began across many sectors. Contractors dismissed workers in trades such as carpentry, masonry, and electrical work, and construction activity slowed.

Real estate purchased at high prices with great optimism quickly lost value, prompting investors to shift their capital toward the stock market. This transition led to the speculative accumulation of capital in the stock market and a divergence of stock prices from their actual values. Thus, the foundations of the path toward the Great Depression were laid.

The Outbreak of the Crisis

By the late 1920s, the stock market in the United States had become a rapidly expanding investment arena. Rising living standards led large segments of the population to invest in stocks, and growing confidence in the market created fertile ground for rapid and largely unregulated expansion in financial markets.  The prices of shares have continuously risen.,^【5】 This attracted even more investors. This situation fostered the widespread belief that one could easily become rich through the stock market.

However, much of this upward trend could be explained not by companies’ actual profits or production performance but by speculative buying and selling. Investors purchased shares not based on the real economic conditions of companies but solely on the expectation that prices would continue to rise. During this period, stock prices rose far above their actual values, and the link between financial markets and the real economy gradually weakened.

This speculative bubble reached a breaking point on October 24, 1929. On this day, known as Black Thursday (Black Thursday)^【6】, a massive crash occurred on the New York Wall Street Stock Exchange. News of the market decline spread in panic, and investors rushed to sell their shares. The wave of selling reached a point where no buyers could be found, plunging the market into deep crisis.

On that day, a loss of confidence occurred not only in the stock market but across the entire American economy. As stock prices collapsed, It has evaporated to 4.2 billion dollars at 1929 prices..^【7】 in a single day. This shockwave rapidly spread to the banking sector and the production economy, officially initiating the Great Depression, which would have global consequences.

Consequences of the Great Depression

The Great Depression led to a reevaluation of economic theories and a restructuring of the state’s role in economic intervention. The crisis’s outcomes promoted the development of the social welfare state in many countries and initiated an era of increased government involvement in the economy. During this period, Keynesian economics played a crucial role.

Keynesian economics,^【8】 is an economic theory developed by British economist John Maynard Keynes. Keynes argued that economies would not automatically return to equilibrium during crises and emphasized the necessity of government intervention in economic processes. The core principles of the Keynesian model can be summarized as follows:

• Stimulating aggregate demand: The government should increase spending during economic downturns to boost aggregate demand, as the private sector is insufficient in generating demand on its own.
• Government intervention and spending: The government should reduce unemployment and inject liquidity into the market by investing in large-scale projects such as infrastructure.
• Employment creation programs: During economic crises, the government should create jobs in the public sector to combat unemployment.
• Promoting infrastructure investment: The government should invest in infrastructure projects to support long-term economic growth, thereby generating employment and increasing overall economic activity.

New Deal (Yeni Düzen) policies^【9】 was developed based on these Keynesian views. Implemented under President Franklin D. Roosevelt, the New Deal increased the state’s influence over economic life and helped the population endure the crisis better through public infrastructure projects and social security programs.

Germany and Political Effects

In Germany, the economic crisis led to the strengthening of extreme right-wing and left-wing movements. The economic chaos of this period accelerated the spread of radical political ideologies and enabled these movements to gain political power.

International Effects

The Great Depression caused economic contraction not only in the United States but worldwide. European countries, particularly Britain and France, faced financial crises, while the Soviet Union, benefiting from its planned economy, was less affected. International trade declined, and the gold standard was abandoned. These global developments triggered profound changes in the world economy.

Social Impacts

The Great Depression deeply affected social structures. Family structures changed, and large-scale migrations occurred from rural areas to cities. Crime rates also increased. As society struggled with unemployment and poverty, social unrest grew. Migration movements led to significant social transformations both in the United States and in Europe.