The Great Depression was a long-lasting economic crisis in the global economy which started in the U. The Great Depression officially ended in , but in reality the U.
The Great Depression was synchronized and comprehensive and affected all the sectors of the global economy. In fact, this was the global economic crisis, however, it received its title namely due to the emotional state the society found itself in: Huge numbers of researches are now devoted to studying the Great Depression and its impact on the USA and the lives of millions of Americans. Thus, Alan Reynolds , p. People still share the feeling that a sharp economic slowdown can happen at any time: This fear is nowadays often exploited as a major justification for the practically unlimited intervention of the government into the economic sphere.
As a result, many scientists today also take the position of criticism over the market capitalism and support economically destructive policy of the authorities. Further in this paper, we will critically examine social and economic causes of the Great Depression, as well as analyze its consequences through the prism of different approaches. We claim that the distortions in the economy were caused by the FRS monetary policy together with incompetent policies of the authorities, which finally led to the World War II.
Because of this fall million people in the U. According to Keynesian theory the Great Depression of in the United States occurred due to overproduction of commodities and lack of money to buy them Rothbard , p. Since the money was tied to gold reserve, and the amount of this metal was limited, there occurred a shortage of money, and hence the shortage of effective demand for goods and services.
Further, in the chain reaction: Before the beginning of the Great Depression the rate of the U. This led to the emergence of hidden inflation, as the government printed new money for the rapid growth of the economy. Thus, as Edsforth , p. The situation occurred where the growth of labor productivity in industry declined, and the amount of pseudo-money bills, receipts, etc. However, there is another point of view about the causes of the Great Depression.
According to the Marxist approach, the Great Depression was preceded by the rapid growth of the U. Thus, from to the U. Conveyor production was invented, the stock market was rapidly developing, the number of speculative trading was growing, the real estate prices were going up McElvaine , p. The increase in production of goods required the increase in the money supply, but the dollar was pegged to gold Bernstein , p. Another common view discussed by Marxist approach is that the responsibility for the Great Depression lies on capitalism and market economy, and only the intervention of the state led to the economic recovery of America Reed , p.
According to this simplified approach, America was smashed and pulled into the depression by the stock market, one of the pillars of capitalism. President Herbert Hoover, a supporter of the laissez-faire principle non-interference of the state in the economy refused to use the tools of state power, and as a result the economic situation deteriorated. The conclusion seems obvious: A popular explanation of the stock market crash of is based on a criticism of using borrowed funds to buy securities.
The authors of many historical studies argue that rampant speculation in shares was associated with the excessive use of leverage.
Moreover, the fall of the margin requirements began to rise, and borrowers had to pay in cash most of the cost of the purchased shares Smiley , p. So, the argument about the leverage does not hold water. However, the manipulation with money and credit flows is an absolutely different matter. Can you picture yourself poor and hungry, standing in a breadline?
Or can you imagine your life, as you migrate across the country in search of work? What does it look like? How does it feel? There are many additional on-line, print, and film resources concerning the Great Depression.
Listed below, are just a few resources you may consider for further investigation. PBS 's American Experience documentary, Riding the Rails, tells the story of the , teenagers who left their homes to ride the freight trains.
Prices fell, production was cut back and workers were discharged. As a result, the economy entered the depression phase of the cycle. The crisis stage of the cycle was brought about by bank failures and by irrational selling of stocks ;thus causing business failures, a slowing in production, a rise in unemployment, and an overall optimistic view about the future.
Lionel Robbins was a professor at the London School of Economics. An example of Robbins philosophy was that the monetary confusion and rampant inflation after the war had hampered. Many policies that the government put out hurt and slowed the recovering economy. One act known as the American Hawley-Smooth of crushed the European industry which was already unstable from the depression. It stopped European trade and prevented European from earning the almighty dollar.
This Act also destroyed any possibilities of regaining the money loaned to them during World War I. The collapse of the German Banking system in had monumental affects on the entire world. It aided to turn, what would have been, a small economic problem into the Great Depression. The Germans also blamed the depression on the harsh terms imposed by the Versailles Treaty, especially the reparation they were forced to pay.
They claimed the reparations brought down the economic vitality of their country to an all time low. Not one single book I have read has blamed any one specific country for the start of this catastrophe. As a matter of fact, each book has said if the countries would have worked in unison rather than focusing solely on themselves we might not have ever heard of the Great Depression. Nobody knows what the result would have been if the countries worked together and resolved the problem before it festered as it did.
No one ever envisioned the extensive duration of the depression. My only prayer is that we never see another time like this again. When American producers cut back on their purchases of raw materials and other supplies, the effect on other countries was devastating.
After Great Britain was again forced to leave the gold standard in , many foreign banks withdrew deposits from America in the form of gold: High unemployment was the most alarming aspect of the Great Depression.
The Great Depression was a grim time in American history. Financial and agricultural insults deeply injured America and its people. The brave men, women, and children who endured those dark years showed amazing bravery, resiliences, and resourcefulness.
Conclusion. In conclusion, the Great Depression negatively affected the United States involvement in their economy. The Great Depression broke the confidence of the American people as well as their leaders. The future of their economy was unclear and shaky strategies were used in .
Great Depression Conclusion. The Great Depression From to , the United States suffered through its greatest economic crisis in its history. Millions of people lost their jobs and went hungry. At this time, it was unclear whether the United States would ever recover. 6. Causes of the Great Depression i. World-wide and domestic factors 6. Summary of the effects of Great Depression 7. Conclusion 8. Works Cited. The Great Depression. Background. The great depression is an immense tragedy that took millions of people in the United States from work.
The Great Depression. The Great Depression was the worst and longest economic downturn in the history of the world economy. The Depression began in and lasted until This economic meltdown affected Western industrialized economies but its effects spread across other nations. The Great Depression was a time of poverty and despair caused by many different events. Its hard to say what caused this worldwide depression because it’s all based on opinion as opposed to factual data.