The great depression of world, also known as 1930s depression, was the most severe economic recession in the modern history. It was the longest and the deepest downturn in the history of the US. It began in 1929 and ended during world war II in 1941. Economists often mention the Great Depression as the most significant, if not the most catastrophic, economic event of the 20th century.

Causes:

There is no harmony among economists regarding the exact causes of the Great Depression. However, many scholars consider the following main factors played a role.

The stock market crash of 1929: During the 1920s the US stock market underwent a historic expansion. It contributed to the Depression through widespread speculation and overconfidence. As stock prices rose to unprecedented levels, investing in the stock market came to be seen as an easy way to make money. Therefore, even ordinary people used much of their disposable income with just a small down payment. Furthermore, even these people borrowed the rest from brokers. This increased leverage made them vulnerable to market downturns. By 1929, stock prices far exceeded the actual value of the underlying companies, which created asset bubble to burst.

when a variety of minor events led to gradual price declines in October 1929, investors lost confidence and the stock market bubble burst. Panic selling began on Thursday, October 24, 1929. This was named “Black Thursday.” The stock market crash of October 1929 signaled the beginning of the Great Depression. By 1933, unemployment was at 25 percent and more than 5,000 banks had gone out of business.

The gold standard: The gold standard is a monetary system in which a nation’s currency is pegged to the value of gold. It contributed to the Great Depression in numerous ways:

1. It limited governments’ ability to control their money supply, which prevented monetary policy responses that could have stabilized the economy during banking panics.
2. Further, it also transmitted the downturn internationally, as countries with trade surpluses sent gold to the U.S.

Effects

The U.S. economy shrank by a third from the beginning of the Great Depression to the bottom four years later.

1. Real GDP fell 29% from 1929 to 1933.
2. Consumer prices fell 25%; wholesale prices plummeted 32%.
3. Some 7,000 banks, nearly a third of the banking system, failed between 1930 and 1933.
4. The unemployment rate reached a peak of 25% in 1933.
5. The Great Depression affected how people lived, both from a physical and mental perspective.
6. Between 1929 and 1933, industrial production in the USA fell dramatically. Some businesses became unproductive, reducing working hours or even shutting down completely.
7. Farmers who couldn’t afford to pay their debts or mortgages continued to be evicted and lost their land. Farmers often couldn’t afford to pay farmworkers, so they lost their jobs. 

The end of the great depression:

Although the New Deal brought hope to many suffering from poverty, hunger, and lack of jobs. Roosevelt’s relief and reform did not end the Depression like many had hoped. After the World War II the world economies saw real change for the better. With World War II came a revival of trade with America’s allies. The US government also made huge investments in war-related businesses. When the war officially ended in 1945, the Great Depression passed and the middle class experienced a surge in growth.

Role of president Roosevelt in ending depression:

Franklin D. Roosevelt’s role during the Great Depression was his New Deal programs. It was a series of  economic and social initiatives after his 1932 election victory. His administration implemented vast government intervention to provide relief, achieve economic recovery, and introduced reforms to prevent future depressions. 

Key initiatives of New Deal programs:

The emergency banking act, Civilian conservation corps, Tennessee Valley Authority, Social Security Act, Works Progress Administration (WPA).