The Great Depression started around 1929 and lasted until the early forties. It was a critical economic depression which effected much of the world, in the time leading up to the second world war. It was the lengthiest, most prevalent, and profoundest depression in the whole of the Twentieth Century. The causes of the Great Depression were manifold. Many attribute it to the massive stock market crash that occurred in 1929. Furthermore, bank failures, a reduction in public spending and purchasing and the American policy with Europe concerning the economy all played their part in the depression. The Great Depression differed from previous depressions both in its severity and in its wide-ranging effects.
The American economy went into a conventional recession in the summer season of 1929, as customer spending plummeted and unsold products started to accumulate, reducing the rate of manufacture (Bentley). Meanwhile, stock prices carried on rising, and by the autumn of 1929 they had arrived at levels that were not acceptable in line with expected future remunerations. On October 24, 1929, the stock market crashed as investors started to get rid of their shares (History). This day saw the trading of a massive 12.9 million shares, and was soon to become known as “Black Thursday” (Rosenberg). Five days after, “Black Tuesday” witnessed 16 million shares traded following a further movement of alarm along Wall Street. Millions of shares were deemed valueless, and the investors who had purchased stocks with loaned capital were eradicated altogether (History).
As consumer confidence disappeared after the stock market crash, the slump in spending and investment caused industrial units and other industries to reduce production and manufacture and start laying off their employees. Furthermore, the individuals who remained working experienced wage reductions and were unable to afford many every day amenities. Numerous Americans who had made purchases on credit sank under debts, and foreclosures and reclamations gradually increased in frequency. The obedience to the gold standard, which linked countries over the globe in a fixed currency exchange, assisted in spreading the Depression from America to around the globe. Europe was particularly effected (History).
In spite of reassurances from President Herbert Hoover and other officials that the predicament would soon end, the problem persisted in worsening over the following three years. By 1930, 4 million Americans seeking employment failed; this number had climbed to 6 million in 1931 (History). At the same time, the country's manufacturing production had decreased by fifty per cent. Many people were becoming homeless, and bread lines became a normal part of life in towns and cities. Farmers did not have enough money to harvest their crops, and had to abandon them to decay in the fields. Elsewhere, people were starving.
In autumn 1930, the first of four stages of banking alarms was activated, as many investors lost assurance in the affluence of their banks and insisted on cash payments, compelling banks to settle loans so as to increase their inadequate cash supplies. Bank runs spread through the US for another time in spring and autumn of 1931 and then autumn of 1932. By early in 1933 thousands of banks had shut. Hoover's government attempted to support fading banks and other organizations with loans; the notion was that the banks would then loan to businesses, which would be able to hire back their employees (History).
In earlier depressions, farmers were habitually unharmed from the worst consequences of a depression as they had the capacity to provide food for themselves and their families. However, during the Great Depression, the Great Plains were struck with a drought and terrible dust storms (Rosenberg). Many years of overgrazing along with the outcomes of a drought, resulted in the grass dying off. With topsoil unprotected, gales scattered the loose earth across miles. The dust storms demolished everything they covered, resulting in farmers having no harvests (Rosenberg).
Hoover was a Republican who had previously acted as U.S. secretary of commerce, thought that government ought not to openly interfere with the economy, and that it was not their obligation to generate employment or deliver monetary help to the people. Nevertheless, in 1932, with the nation stuck in the complexities of the Great Depression and around 13-15 million individuals jobless, Democrat Franklin Roosevelt secured an awesome triumph in the presidential election. By Inauguration Day, each American state had commanded all lingering banks to shut at the climax of the fourth stage of banking anxieties, and the American Treasury failed to have sufficient money to give government employees. However, according to the History website, FDR offered a quiet vigour and hopefulness, notoriously saying that, “the only thing we have to fear is fear itself” (History).
Roosevelt acted straight away in tackling the nation’s economic anguishes, declaring a four-day “bank holiday” in which banks were to shut to allow Congress to pass reorganization regulation and resurrect those banks decided to be healthy enough. Additionally, he started to speak to the public openly via the radio, and these talks made a significant impact in re-establishing confidence of the people. Through Roosevelt's first 100 days in power, his management passed legislature that intended to steady industrial and agricultural manufacture, generate employment and encourage an upturn. Furthermore, Roosevelt pursued improvement in the financial structure, creating organisations to control the stock market and avoid misuses of the type that resulted in the original crash (History).
Amid the programs of the New Deal that helped salvage the Great Depression were the Tennessee Valley Authority (TVA), which constructed dams and hydroelectric developments to manage flooding and deliver electricity to the penurious Tennessee Valley area, and the Works Project Administration (WPA), a permanent employment scheme that gave work to 8.5 million people between 1935 and 1943. When demonstrating early indications of revival starting in spring 1933, the economy maintained progress through the following three years. A severe recession struck in 1937, triggered partly by the Federal Reserve's judgement to raise its requests for cash in standby. Although the economy started to pick up once again in 1938, this second harsh downturn overturned countless improvements in manufacture and employment and extended the outcomes of the Great Depression until the close of the decade (History).
The Great Depression had overwhelming consequences in almost every country of the world, both the richer and the poorer. Personal wages dropped as did tax revenue. Furthermore, profits and prices dropped globally, and trade across international waters plummeted by over fifty per cent. By the mid-thirties, certain economies began to improve. However, in various other countries the adverse effects of the Great Depression continued up until the commence of the second world war.
Works Cited
Bentley, Jerry H. et al. Traditions & Encounters: A Brief Global History. 2nd Edition: 1500
To Present. Volume II. New York: McGraw - Hill Companies, Inc. 2010.
History. “The Great Depression.” 2012. Web. 6 July 2012.
http://www.history.com/topics/great-depression
Rosenberg, J. “The Great Depression.” About. 2012. Web. 6 July 2012.
http://history1900s.about.com/od/1930s/p/greatdepression.htm
