The Great Depression GNP

Holly F, Lilly B, and Sharon C

What is GNP?

GNP (Gross National Product) is the measure of a country's economic performance, based on what the citizens produced, such as goods and services. It's an estimate of the total money value of all the final goods or services produced in one year.

Gross National Product (GNP)

Graph: GNP 1920-1932

Big image

Given the GNP figures from 1920 to 1929, how would you characterize the health of the economy during the 1920’s?

The vast economic growth during the 20’s was what earned it the name “The Roaring 20’s”. The GNP rose rapidly each year, by margins which would be considered above average even today. It was a period of great innovation in both business and manufacturing, which encouraged people to invest. It seemed nearly everyone wanted a piece of the market, and this trend continued all the way up into the latter months of 1929, when the stock market crashed. There may have been several indications of this impending crash throughout the decade leading up to it (Several minor recessions, farm products failing) however the prosperity that the majority of the country experienced blinded them to the signs. New markets were constantly being created and products such as cars and miscellaneous household materials seemed to become a necessity. A good portion of the population was spending, which helped the economy flourish. Some areas of work seemed to experience less wealth however, which was one of the main contributions to the Great Depression. Farmers, Miners, Railroad workers, and Textile workers wages rose more slowly than production, and as a result they often had to buy on loans and credit. This accumulated debt caused them to stop spending, and when the stock market crashed they were, like many others, unable to pay back their lenders. While the 20’s saw for the most part a healthy economy, it was being held up by stilts and by the 1930’s it crumbled fast.

What happened to business production from 1929 to 1932?

On October 29, 1929, also known as Black Tuesday, the stock market suffered its most devastating crash in history after huge numbers of people attempted to trade their stocks to get out of the market. This crash marked the beginning of the Great Depression and devastated the United States economy. Because of the sudden drop in stock prices, many businesses and factories were forced to shut down entirely, putting millions of people out of work. Unemployment reached its all time high with around 25% of the United States population jobless. This deflation caused people to stop spending, which only deepened the depression and made businesses have to struggle more. Banks shut down by the dozen, as people were forced to withdraw any savings to pay back loans, and the banks could not meet the demand. Each year following 1929 business production fell, and it never truly recovered until the end of the depression eleven years later.