World Depression - Research Paper Example

?Introduction Just a decade preceding the World War II, world witnessed one of the harshest economic depressions of the time when in 1929, economy ofUS started to crumble. Though the overall timings of the recession for different countries differed however, it has now been accepted that Great Depression started during 1929. It has been argued that just after the World War 1, the old European World Order actually failed to create an equitable and wise order to ensure peaceful settlements between the nations. The war has taken its toll on the respective economies of the European countries also as besides losing millions of soldiers and civilians, European economies suffered due to lack of economic growth and prosperity. This started to further worsen when world economy started to suffer due to the collapse of the US economy. The crash of US Stock Market during October 1929 started a chain reaction of economic downturns at the global level where industrialized countries started to face the similar decline in economic activity. Germany especially felt the most of the brunt as it was not only devastated by war but by low economic output and slow growth too. Since most of the money borrowed to finance the war came from US therefore the overall economic consequences of this have been harsh at the global level. What caused this recession, the effects it left on the global economy and whether this event led to the second World War are some of the questions which will be discussed in this paper. Great Depression It has been unanimously accepted that the Great Depression started with the collapse of US Stock market. The excessive speculation in the market resulted into creation of stock prices bubble which finally burst and created the widespread economic consequences at the global level. One of the key impacts of the stock market crash was the systematic failure of the banks and hence a run on banks occurred. The impact further multiplied and economic growth slowed down and as a result people started to lose their jobs. The conditions further became difficult when a draught hit the Midwest region of the country thus relatively creating scarcity of the essential items. (Ludlam) The failure of the banks created run on the banks and economy almost stopped generating any deposits or savings as due to lack of adequate deposit protection laws, many lost their entire life’s savings overnight. (Bentley, Ziegler and Streets-Salter.) It is critical to note that US was the largest lender during the World War 1 and many allies countries have extensively borrowed from US. In the aftermath of the recession in US and the failure of the financial institutions, banks in US started to call their loans thus putting pressure on already devastated economies of Europe. These actions therefore created a strong chain reaction of economic downturn at the global level thus creating a global recession. (Ludlam) Many also argue that the rise of economic distress also allowed the rise of Fascism within the European block and aroused the sentiments which finally led to the World War 2. World War II and Great Depression The decline in the economic activity as well as the rising inequality within Europe due to economic crisis has allowed rulers like Hitler to dominate the policy making arena within Europe. People were miserably exhausted not only by the World War 1 but by the economic collapse of these countries also. The spread of the global recession therefore slowly and gradually led to the march towards the Second World War. (Garraty) Though the economic slowdown has allowed rulers like Hitler to rise and dominate however the World War II could have been averted probably with the help of collaborative economic approach where the political solution of the problem could have been sought. During that era, US largely remained neutral however; it continued to provide supplies as well as other support to the allies. If during that era, US has maintained its neutral stance for longer and without actually discriminating between the nations, the War could have been averted. Similarities between current and Great Depression Industrial nations of the world are facing another depression which started during 2007 and is still believed to be faring ahead. One of the important similarities between the two depressions is based on the fact that both emerged from US and their origin and causes were relatively same too. The Great Depression during 1930s was the result of the crash of stock market whereas the current depression is due to the failure of the financial institutions. In earlier instance, the crash of the stock market caused banks to fail whereas in current crisis, failure of banks started to have an impact on the stock markets of the world. (Bartlett) However, the current crisis are relatively different because it did not resulted into a widespread political crisis neither it allowed fascist powers to emerge either from US or European block. This lack of political upheaval therefore has created relatively softer impact of the economic crisis on current socio-political environment. Conclusion The Great Depression is considered as one of the most important events of last century as it not only resulted into a World War but also created strong socio-political impacts on the US and Europe. The Depressions started with the collapse of stock market in US which further caused failure of the banks. During World War-1, US was the largest lender to the allies and therefore in the wake of the economic downturn, banks in US started to call back their loans. European economies were already devastated by the economic impacts of war and therefore this act by the US banks further created pressure on the ability of the Industrial countries to payback their debt. This therefore spiraled into a full-fledged global economic depression and allowed fascist powers to emerge. The rise of Hitler therefore can be attributed to the political vacuum left as a result of the economic downturn. The current crisis is similar to the Great Depression due to the fact that both have emerged from US but current crisis has not yet created any political upheaval. Bibliography Bartlett, Bruce. The Great Depression And The Great Recession. 30 September 2010. http://www.forbes.com/2009/10/29/depression-recession-gdp-imf-milton-friedman-opinions-columnists-bruce-bartlett.html. 08 November 2011. Bentley, Jerry, Herbert Ziegler and Heather Streets-Salter. Traditions & Encounters A Brief Global History: From 1500 to the Present. New York: McGraw-Hill, 2010. Book. Garraty, John A. The Great Depression. New York: Anchor, 1987. Book. Ludlam, Carol. General Knowledge: “Memories of the Great Depression". Arkansas, 2011. Lectures. Ludlam, Carol. Carol’s Lectures: Third Set. World History II. Ark City, 2011. Lecture. Read More