Overview Of Great Depression Events

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The Great Depression that took place from 1929 to 1933 and went down in history as the most severe economic worldwide crisis America has ever had to endure. To this day, there are still many perspectives as to what caused it but we can all agree that it destroyed the wealth and prosperity of millions of people in the United States and many countries globally. The effects of the great depression lasted until 1941 with America’s involvement in World War II. In this essay, we will discuss the many factors that contributed to the causes and effects of the great depression and how it contributed to society today. Interestingly, it exposes how the government’s quests to provide solutions can impact the world both positively and negatively, and is still a never-ending pursuit.

Before the crash, the United States was going through many advancements and experiencing an ever-expanding growth in technology and communications. It was a period dubbed “the roaring twenties”, a time known for its economic prosperity. World War I had just ended but it brought many new industries that flourished, creating an all-time high to America’s economy. Mass production of car ownership and expansion of roads were opening up all over the world. Land prices and housing were booming and introduction of communications with the telephone and radio as well as household products hitting the market, like vacuum cleaners and washing machines. The economy was bursting with a wealth of new opportunities and it also introduced consumer credit providing middle class Americans with the ability to borrow and invest. It was based on a new invention called “margins” which allowed people to borrow money from their broker to buy stocks at only 10% down. The dream of prosperity had presented itself to all citizens not just the wealthy and many found themselves investing on these borrowed terms. However, all of the new exuberant buying created demand and the over production in industry items sky-rocketed but quickly spiraled into an “Asset Bubble”, which is when assets rise in price over a short period that are not supported by the value of the product (Amadeo, April 2020). As a result, stock market prices rose to catastrophic levels sending the stock market into a panic. Consequently, after almost a decade of privileged and affluent living, the stock market crashed and investors lost everything. The day known now as Black Tuesday, October 29, 1929, marks the official start date of The Great Depression. Making matters worse, the occurrence of natural disasters struck, tornadoes, blizzards and The Dust Bowl, which was known as the worst drought in over 1000 years devastating the Midwest (Amadeo, January 2020). It destroyed crops and all agriculture causing food shortages and airborne illnesses. Many Americans lost their jobs, their homes, and the unemployment rate rose to 6 million by 1931 (History, 2020). It was a very bad time for America and other countries.

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Herbert Hoover was elected just 8 months prior to the Great Depression. He was known for his laissez-faire economic theory and that a free-market economy would allow capitalism to fix the economy. His idea was to keep money in people’s pockets by offering tax cuts and hoping business leaders would not lay off workers. He also tried implementing the Smoot-Hawley Act in an attempt to protect American businesses and farmers by raising taxes on imports which in turn angered foreign economies. It forced them to retaliate and turn their backs on American-made goods reducing global trade overall and worsening the depression globally. U.S. imports and exports to Europe fell by some two-thirds between 1929 and 1932 and global trade declined while that legislation was in effect (Britannica, April 2020). Unfortunately, none of his efforts worked and at re-election time, he was out-voted to Franklin D. Roosevelt (FDR). Known for his famous comment, “the only thing we have to fear, is fear itself” which basically meant to the American people that their fear was making things worse. Immediately, he introduced key pieces of legislature still in effect today. The Federal Deposit Insurance Corporation (FDIC) to protect depositor’s accounts as well as the Securities and Exchange Commission (SEC) regulating stock market abuses. Most famously, he passed the Social Security Act (SSA) which provided Americans with financial assistance by raising taxes on the wealthy. This program also provided the need for Social Security numbers and is still used to track people today. Among many other federal programs that were implemented, FDR served from 1932 through 1944 not completing his fourth term but leaving a lasting legacy of federal programs and words of wisdom that still exist today.

Ironically, the Great Depression parallels with what is happening in our current economy and the Covid-19 pandemic. Did we learn anything from the Great Depression that could be applied to our situation today? The stock market seems volatile with valuations at unnerving levels; the people are panicking and looking to pull their money out. We see even further concern with the federal reserve releasing stimulus income, but is pumping money into the economy a mistake? There is talk of imposing tax cuts to businesses but we learned that didn’t work for Hoover. The fear in the air is exactly what FDR said can make things worse. We can only hope that our pandemic ends much quicker than the Great Depression did.

In conclusion, it is no question that The Great Depression was the most destructive and worst economic crisis in the world lasting over a decade. With widespread hunger and sky-rocketing unemployment numbers causing poverty worldwide. We can also see the impact it made with our global partners on the declined import/export trade value. However, it also instituted federal programs that are still existent today and possibly working well for many retirees, disabled, or citizens in time of need. Perhaps it is the lesson of character that we can all take from this tragedy.

References

  1. Amadeo, Kimberly. April 2020. Asset Bubbles: Causes and Trends. Published by the balance, part of the Dotdash publishing family. Retrieved at:
  2. https://www.thebalance.com/asset-bubble-causes-examples-and-how-to-protect-yourself-3305908
  3. Amadeo, Kimberly. January 2020. The Dust Bowl, Its Causes, Impact, With a Timeline and Map. Why another Dust Bowl Could Happen. Published by the balance, part of the Dotdash publishing family. Retrieved at:
  4. https://www.thebalance.com/what-was-the-dust-bowl-causes-and-effects-3305689
  5. Britannica, April 2020. Herbert Hoover, President of United States. Written by the Editors of the Encyclopaedia Britannica. Retrieved at: https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act
  6. History, February 2020. Great Depression History. Retrieved at:
  7. https://www.history.com/topics/great-depression/great-depression-history  

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