The Causes of the Great Depression The Great Depression was an economic downfall that to this day is the worst economic downfall in U.S history. The depression started in the United States. People all over the world were affected by it, especially in Europe, Germany, Great Britain and other industrialized areas of the world. Mainly because America was a big creditor to those countries after World War I. The Great Depression lasted in America for at least ten years, but it took twenty-seven years to get the economy back above depression levels.
The Great Depression was triggered by a sudden, total collapse in the stock market. This day, October 29, 1929, came to be known as Black Tuesday. There were many probable causes of this devastating time, such as massive bank failures, and the stock market crash. Others, such as economists, such as Peter Termin and Barry Eichengreen, believe the blame lies on Britain’s decision to return to the Gold Standard. According to many sources, recession cycles are a normal phenomenon.
Perhaps the worst economic downturn in the history of the United States occurred from 1930-1939. The Great Depression led to domestic and international crises effecting the poor and wealthy alike. Many financial experts today continue to debate the cause of The Depression, although most agree that several events led to the economic decline. The famous stock market crash on October 29, 1929 is just one of many causes economists believe led to The Great Depression. Known also as Black Tuesday, October 29th left stockholders shattered with recorded losses reaching $40 billion dollars (Kelly, n.d.).
The Great Depression was a severe period of poverty and tragedy. It effected many other countries not just America; especially in Europe, where many countries had not fully recovered from the aftermath of World War I. The cost of World War I weakened the ability of the world to respond to a major crisis. America alone had ten billon dollars of debt from the war. In Germany America’s economic failure contributed to the rise of Adolf Hiltler, so the Stock Market Crash had a domino effect on our country and others.
History HL Research Essay Discuss and evaluate the effects of the Great Depression on France The Great Depression is a name for a worldwide economic depression lasting from 1929 to the late 1930s or 1940s, depending on individual countries. Depression in economical terms is defined as ‘a severe downturn in economic activity. These are considerably worse than recessions.’. It is thought that it started with the crash of the stock market in USA on ‘Black Tuesday’ 29th October 1929, but some economics and historians debate whether this is a start or just a symptom of the Great Depression. Other major causes and symptoms of such a severe economic crisis were the quantities of gold stockpiled by particular countries, large number of banks failing during the 1930s, the reduction in money spent by people and huge international trade barriers placed by governments.
In my essay, I will briefly describe,compare and contrast the course of The Great Depression and The Great Recession in the United States , and try to find analogies in the causes and policy responses within a framework of Business Cycle theories. The Great Depression The decade prior to the 1930's, the US was in the time of great economic boom known as “The Roaring Twenties”. The national income risen by 20%. However the growth was not distributed equally amongst Americans. Between 1920 and 1929, the disposable income of the population rose 9%, while the top 1% enjoyed a massive 75% increase.
However, with there being such regional differences between the north and south in Britain, the social and economic impact of the Great Depression on Britain as a whole was extremely uneven. For many towns, particularly those in the north, the effect of the depression could not have been any worse as there was mass unemployment, extreme poverty and as an effect of this, long-term hopelessness. However, elsewhere, the 1930s became a time of affluence. During the 1920s and 30s there was a large social and cultural change. The 20s became known as the ‘jazz age’, the roaring 20s and the gay decade because of the relief throughout the country and its peoples after the horror of World War I.
Total losses for the four days: $30 billion, 10 times federal budget and more than the U.S. had spent in World War I ($32B estimated). The crash wiped out 40 percent of the paper value of common stock. Although this was a cataclysmic blow, most scholars do not believe that the stock market crash, alone, was sufficient to have caused the Great Depression. And the next possible cause is bank failure.In 1929, there were 25,568 banks in the United States; by 1933, there were only 14,771. Personal and corporate savings dropped from $15.3 billion in 1929 to $2.3 billion in 1933.
Crop prices fell by over fifty %. People went hungry because so much food was produced that production became unprofitable. Others were unemployed because they had produced more than could be sold. Huge numbers of Americans had their lives upset by the Depression. Tens of thousands of migrant farm workers travelled the nation looking for employment.
Franklin D. Roosevelt and the Success of His New Deal The American economy started weakening by the middle of the1920s. However, over investment and speculating in stocks inflated their prices that contributed to the delusion of a robust economy. Since stocks were the hottest commodity to invest in, people borrowed money and used their stocks as collateral to the banks.The Great Depression was considered started on Black Thursday October 24th, 1929 when the New York Stock Exchange collapsed in the greatest market crash with the Dow closed at 316.38, and the plunge continued until the Dow reached its low of 41.22 in 1932. When the stocks values dropped, people were not able to pay for their debts while the banks just held worthless collaterals. Many banks declared bankruptcies because they could not get back their money from stock investors.