Scrutiny of the 1929 Global Financial Crisis: Causes, Features, Consequences and Remedy Tools

Abstract

The Worldwide economic downturn that began in 1929 and lasted almost until 1939 was the longest and most severe financial crisis that ever led to depression and experienced by the developed countries. Although the depression originated in the United States, it resulted in drastic declines in output, severe unemployment, and acute deflation in almost every country of the globe. The defining characteristic of the 1929 financial crisis is the wholesale collapse of virtually every aspect of the economy. For over four years, beginning in the summer of 1929, financial markets and institutions, labor markets and international currency and goods markets all virtually ceased to function. Throughout this, the government policymaking apparatus seemed helpless. The study seeks the analysis of the main causes, features, consequences and remedy tools of the 1929 global financial crisis. The study presents a review and scrutiny of the 1929 financial crisis. It presents a discussion for the reasons of the crisis in terms of roaring twenties, credit boom, low interest rate, speculation, investment trust and margin trade. Furthermore, it represents a descriptive analysis for the features and consequences of the 1929 crisis on the financial sector and real economy as well as the remedy tools applied for the crisis.