The economic crisis that hit the global economy in 2008 is often compared to the Great Depression. The crisis has caused hundreds of thousands of small tragedies, depriving people of homes and livelihoods. Knowing about the events that occurred in the last century, one could not help drawing an analogy with the current global financial crisis. All began in the United States, again everything started with the financial sector and then spread to the real economy, the stock market collapsed, consumer demand plummeted, unemployment increased drastically, money devalued. Although the past events are reminiscent of the current situation, are the circumstances really the same?
The closest crisis of this magnitude referred to by many commentators was the Great Depression. Franklin Roosevelt, as soon as he came to power, laid all the blame on financiers in his inauguration speech. "The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths.' The situation was dire and President demanded “broad executive power to wage war against the emergency” (Hundred Days).. The Congress made it possible for him to introduce the Hundred Days policies that resulted in complete reshaping of the banking system, “the abandonment of the gold standard, the creation of a national emergency relief system and a federal system to enable farmers to remortgage their farms” (Hundred Days).
Scott Reynolds Nelson elaborates on the factors that lead to the Great Depression and another crisis that goes by the name the Panic of 1873. He summarizes the prevailing historians’ opinion about the causes of the 1929 crisis, which included “overlarge factory inventories, a stock-market crash, and Germany's inability to pay back war debts, which then led to continuing strain on British gold reserves” (Nelson). He then explains why these were not the case in 2008. The gold reserves are no longer a factor in the banking system, production volume is now effectively controlled by the market, and there are no significant war debts. So Nelson concludes they should not be paralleled so rigorously. Then he brings to attention another crisis that he thinks more fitting the description of the 2008 one. The root of all evil shifted to Europe that suffered the so-called American Commercial Invasion, which had made the European grain traders uncompetitive. The prior years in Europe were marked by the residential construction municipal construction boom, which had been made possible by bank mortgage programs. The world economy was shaken and banks collapsed as they were locked by the unfinished constructions that were used as collateral. The interbank loan rates rocketed and the crisis expanded worldwide affecting all businesses that had insufficient capital reserves. Nelsons then touches on the railroads problem and social consequences in the US, Europe and Russia. Nationalistic movement and blaming the Jews were mentioned in the case of Europe and Russia. Trade unions emergence was another remarkable result that played a major role in all later major changes in Europe.
Daniel T. Rodgers describes Daniel T. Rodgers as an anomaly. He focuses on the social visions before and after the crisis and refers to Roosevelt’s New Deal and the importance of “interdependence” concept back in the 30s of the last century and now. “These were the years in which the sociological survey was invented and sociology took shape as a discipline”. This was the case, according to Rodgers. The society was changing drastically, new ideas emerged, thought experiments were introduced into the practice. The periods preceding both crises were the “experimental” eras that ended in great turmoil of minds and system shifts. The economy had to accommodate to new variables, new technology etc. In other words, in both cases we see cultural shifts, changes in thinking and perception. The social paradigm changed, new concepts and social roles appeared, as was the case with the feminist movement. In the article Rodgers mentions “[t]he definition of "woman" -- invoked by 1970s feminists -- fractured along lines of race, sexuality, politics, and values.”
The article on the circumstances of Roosevelt launching his presidency is not very informative. It serves as a good introduction to the economy emergencies. But it still looks more like President’s lauding piece. The Hundred Days legislation is not discussed in detail, no alternative opinion is presented.
Nelson did not refer to any trustworthy commentators who might have had convincing proof of the opposite opinion, the one that finds similarities in both crises. Although he seems to know what he’s talking about and his generalizations about the Great Depression are well founded on research, it would have looked more unbiased if he gave voice to other experts. Also Nelson claimed in his article that only industry giants survived and benefited from the crisis acquiring smaller competing businesses. He did not mention in this connection the situation in 2008-2010, which leaves an important question open: did the crisis have similar effects on the industries as back in 1873 or 1929? One can have an impression that it was left out intentionally. The focus on social ramifications is key to the History in Context concept so, in my opinion, the article served the desired purpose.
Daniel T. Rodgers utilizes a completely different approach. He does not search for answers in economic theory alone. He is content with a very general factual analysis but what interests him is the social change. For his ends the Great Depression and the Great Recession are enough, although, I believe, his article would have been fuller if he’d used examples from earlier crises. The one before the French revolution would have really put it in context. He uses the term the Age of Fracture that always, in his opinion, ends with reshaping the world in many aspects, economy being an inherent one.
In my opinion, two aspects factored in the emergency of 1929. First, there was a huge debt that was not to be returned in the near future if at all? In 1929, after World War I, the United States was the largest creditor nation. The consequences of the war led to the situation where the difficulties of debtor countries were automatically transferred to the financial system and the United States. The financial system itself was under regulated and “interdependency” mode of thinking was not yet there. So the business was not centralized, effective bailouts were not possible. So the panic, which is the major reason of economy stagnation, was unrestrained. In 2010 the country had a fairly stable budget and low inflation. The US dollar remained the world's main reserve currency and, in spite of everything, is still strong. The financial system is more stable. Nowadays there are many means of supporting the weak players, thus helping to avoid certain risks and guard off panic, which seems to be the proper name for any economic crisis.
Reference List
(2008). The First of the Hundred Days: March 4th, 1933. History Today 58.13. U.S. History in Context. Retrieved fromhttp://ezp.tccd.edu/login?url=http://ic.galegroup.com/ic/uhic/AcademicJournalsDetailsPage/AcademicJournalsDetailsWindow?failOverType=&query=&prodId=UHIC&windowstate=normal&contentModules=&display-query=&mode=view&displayGroupName=Journals&limiter=&currPage=&disableHighlighting=true&displayGroups=&sortBy=&search_within_results=&p=UHIC%3AWHIC&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA176204303&source=Bookmark&u=txshracd2560&jsid=f2804f423a84dfcd0a09ea4dc6a1a29c
Nelson, S. (2008). The Real Great Depression. The Chronicle of Higher Education 55.8 (2008). U.S. History in Context. Retrieved fromhttp://ezp.tccd.edu/login?url=http://ic.galegroup.com/ic/uhic/AcademicJournalsDetailsPage/AcademicJournalsDetailsWindow?failOverType=&query=&prodId=UHIC&windowstate=normal&contentModules=&display-query=&mode=view&displayGroupName=Journals&limiter=&currPage=&disableHighlighting=true&displayGroups=&sortBy=&search_within_results=&p=UHIC%3AWHIC&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA186906149&source=Bookmark&u=txshracd2560&jsid=621b1ecab161a38232f8c0916242bd0c
Rodgers, D. (2011) Economics in an Age of Fracture. The Chronicle of Higher Education 57.19. U.S. History in Context. Retrieved fromhttp://ezp.tccd.edu/login?url=http://ic.galegroup.com/ic/uhic/AcademicJournalsDetailsPage/AcademicJournalsDetailsWindow?failOverType=&query=&prodId=UHIC&windowstate=normal&contentModules=&display-query=&mode=view&displayGroupName=Journals&limiter=&currPage=&disableHighlighting=true&displayGroups=&sortBy=&search_within_results=&p=UHIC%3AWHIC&action=e&catId=&activityType=&scanId=&documentId=GALE%7CA246195118&source=Bookmark&u=txshracd2560&jsid=2e07e493386b1d1ba7e8f9936c7b4654
