The Great Depression was a period of major financial dejection that occurred in the mid 1930s. It was the longest, most profound and most widespread devastation of the twentieth century for a lot of countries such as Ireland, Italy and America. In the 21st century, the Great Depression is regularly utilized as an illustration of how far the world's economy can decline.The following is a paper on the Great Depression in America: The causes, the start, effects, main players, the end and aftermath of depression are discussed in the paper.
In the United States the Great Depression commenced, after a fall in stock costs around September 4, 1929 and got to be overall news with the stock trading crash of October 29, 1929 ‘Black Tuesday’. Between 1929 and 1932 the overall GDP fell by an expected 15% falling overall to under 1% from 2008 to 2009 amid the Great Recession. The Great Depression had devastating effects with the unemployment level in the U.S. rising to 25%.
The rate of crime went up while health care became a secondary need. The level of education went down as people could not afford it. Prostitution and other social crimes went up. Drought was prevalent in the horticultural lands, organizations and families defaulted on massive sums of loans and more than 5,000 banks failed. The Great Depression led to the abandonment of the farms by the farmers leading to dust bowls. Dust bowls refers to the presence of huge dust clouds over Texas, Oklahoma, Kansas, Nebraska, Colorado and New Mexico. These people shifted to the urban areas in the search for less hostile environments. These resulted due to poor crop rotation practices in the period before the Great Depression, 1930 -1936 followed by the farmers abandoning their farms due to the prevailing drought in that period. Hundreds of Americans became destitute and started congregating in shanty towns named "Hoovervilles" and these started to show up over the country. Accordingly, President Hoover and Congress endorsed the Federal Home Loan Bank Act, to goad new home development and decrease abandonments. This was unsuccessful. The last endeavor of the Hoover Administration to empower the economy was the entry of the Emergency Relief and Construction Act (ERA) which included assets for public works projects, such as dams and the making of the Reconstruction Finance Corporation (RFC) in 1932. The Reconstruction Finance Corporation was a Federal office with the power to loan up to $2 billion to save banks and restore trust in money related establishments. Unfortunately, $2 billion was insufficient to spare every one of the banks and bank runs and bank disappointments continued.
The causes of the Great Depression were theorized by several experts and theories. The Keynesian theory was developed an English Economist John Maynard Keynes. He purported that the lower total consumptions in the economy added to an enormous decrease in income and to employment. His fundamental idea dwelled on the fact that to keep individuals completely utilized, governments had to run shortages when the economy was abating, as the private sector would not contribute enough to keep the economy from receding. Keynesian business analysts approached governments amid times of financial emergency to get a move on by expanding government spending and/or cutting expenses. As the Depression wore on, Franklin D. Roosevelt attempted several projects to restart the US economy. This enhanced the economy but Roosevelt never spent enough to bring the economy out of retreat until the beginning of World War II.
The Monetarist theory was supported by individuals that believe in the great role played by governments in the control of the amount of money in circulation. Monetarists take after the concept given by Milton Friedman and Anna J. Schwartz. They contend that the Great Depression was brought on by a banking crisis that saw 1/3rd of all banks vanish, a decrease of bank shareholder riches and all the more vitally monetary contraction by 35%. This brought on a deflation of 33%. The Federal Reserve latently watched the changing of an ordinary subsidence into the Great Depression. Friedman contended that the descending turn in the economy, beginning with the stock market crash would not have had major impact had the Federal Reserve taken forceful action.
One reason why the Federal Reserve did not act to constrain the decline of the cash supply was the gold standard. Around then, the measure of credit the Federal Reserve could issue was restricted by the Federal Reserve Act, which required 40% gold support of Federal Reserve Notes issued. By the late 1920s, the Federal Reserve had very nearly hit the point of passable credit that could be upheld by the gold in its ownership. This credit was as Federal Reserve demand notes. On April 5, 1933, President Roosevelt marked Executive Order 6102 making the private responsibility for gold certificates, coins and bullion illicit, decreasing the weight on Federal Reserve gold.
World War II is viewed by many specialists to have been the main accelerant for the end of the Great Depression. With the US joining the World War II in 1941 saw the employment levels reduce to below 10%. This period also saw the expenditure of the country in the war doubling the economic rebirth.
In addition, women are also seen to have played a major role leading to the end of the Great Depression. However, this was not without several hardships. Women without a steady income were dealt a big blow during the great depression. Thus the birthrates fell all as pregnancies were delayed till the women felt that were economically ready. The women adapted to the harsh economic times to ensure the survival of their families. They were forced to use cheaper sources of food, repair old clothes and take jobs. The women had to work to support their families as the men had been deployed in the armies. This therefore depicts the major role that women played in the recessive economy.
The business owners in America also played a big role in ending the Great Depression. Once the economy recovered, investments and businesses sprang up consistently. In fact business owners invested once more despite the country’s heavy financial debts and taxes.
Roosevelt in an effort to averse the effects of the depression introduced several policies. The dust bowl situation was controlled through the enactment of several acts; Agricultural Adjustment act of 1933, Civilian Conservation Corps act of 1933 and Soil Conservation Service act of 1935 among others. These policies are often viewed as part of the reason why the country recovered. In fact thereafter America has continued to develop strong policies for various sectors more so the financial sector. This is exemplified by rthe formation of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC).
However, some of the after effects were not positive. Most of the people that experienced the depression remain wary of banks. They are also prone reluctance to spend money, hoarding and most importantly avoidance of the stock market. The rate of crime did not go down, the age at which men married was late due to the fact that they were trying to be financially stable to be able to raise families while the level of education was also very low.
The great depression was a major defining landmark in the American history. The effects of the depression on America were so profound such that some of the existing policies in America today are a product of this era. This partly explains the robust financial sector in America today. An alternative route would have meant a weak and lagging economy of America. Additionally, the lessons learnt from the experience had lasting effects. Most of the countries that underwent the depression and recovered have had strong and steady economies as well.