In the late 1920 until the early 1940s the world experienced the worst and longest economic fall down. This economic collapse is referred to as the great depression. It began in the United States and spread to other industrial countries owing to the fact that such states were economically dependent on each other. During this period, there was a rapid decline in the production and sale of goods; severe unemployment and close of many businesses. It is estimated that at some point, more than 15 million Americans were unemployed. This tragedy marked the onset of government involvement in the economy and society holistically (Goldfield, 2000, Pg 79).
Though at its occurrence the economy was flourishing, income was disproportionately distributed; the affluent made hefty profits while the not so well off spent more than they earned. At that time, there was little concern for social issues with much attention being paid towards greater individualism. The rich got richer by investing in the stock market while the poor got poorer by spending money they did not have and on products they really did not require.
Though the foregoing are among the causes of the depression, the trigger was however the stock market crash on October 29, 1929; a day referred to as the Black Tuesday. Stock prices took a nose dive with little hope of recovery. This sent shockwaves in the public, majority of people tried to offload their shares but no one was willing to buy them. Collapse of the stock market, believed at that time to be the surest way to get rich, dealt a death blow to the economy.
Collapse of banks was next in line since they had invested hugely in the stock market. Close of banks exacerbated the situation, people hurried to withdraw their money in the few open banks afraid that they would lose their money. These immense withdrawals led to the close of the few banks that had survived the first shockwave. Additionally, since banks had provided loans to invest in stock and purchase of unnecessary products referred to in the foregoing; there was a lot of default in repayment, further adding to the bankruptcy.
The situation was further worsened by natural calamities during the 1930s. Parts of the Southern Great Plains region experienced severe drought, soil erosion and dust storms (Bourke-White, 1935). These areas where collectively referred to as the dust bowl. The calamities led to lose of homes and farms displacing many families. The land also became barren and as such nothing could be grown on it.
The response of the government, then under the presidency of Herbert Hoover was optimism for recovery. When Franklin D. Roosevelt was elected in 1932 he introduced programs then referred to as the New Deal (Appleby, 2004). Essentially, these programs extended government intervention into new areas of economic and social concerns and created social assistance mechanisms at the national level. This expanded the presence and role of the federal government in the economic and social spheres.
This extended role led to the introduction of social security programs and formation of labor unions. The government undertook to help citizens who were unemployed or disabled, older Americans, mothers and children (McElvaine, 2008). Union activity was also protected under the law leading to formation of labor unions. This role also precipitated the involvement of the federal government in the regulation of the free market (Rothbard, 2000, pg 329-330).
The citizens having experienced the depression changed their attitude towards life, work and the society. In order to prevent its reoccurrence some become frugal and so as to save while others focused on accumulating material possessions to create a comfortable life. On the whole, individualism was replaced with an emphasis on community, compassion and cooperation. Such values informed, then and to date, political and labor movements further discrediting individualism.
Work Cited
Bourke-White, Margaret. “Dust Changes America.” The Nation, May 22, 1935.
Goldfield, D. et.al, The American Journey: a History of the United States. Addison Wesley
Longman; 2nd edition Volume 2. 2000.
Appleby, J., Brinkley, A. and McPherson, M. The American Journey: Reconstruction
to Present. Mc Graw-Hill. 2004.
McElvaine, Robert S. "Great Depression in the United States." Microsoft® Student 2009 [DVD].
Redmond, WA: Microsoft Corporation, 2008.
Rothbard, M. America’s Great Depression. The Ludwig von Mises Institute. 2000.
