The Great Depression - Research Paper Example

?The Great Depression The Great Depression was one of the biggest tragedies in the history of America that Americans have been into. “The Great Depression was a worldwide economic crisis that in the United States was marked by widespread unemployment, near halts in industrial production and construction, and an 89 percent decline in stock prices” (Taylor 2012). It was the reign from 1929 till early 1940s. 1920s in the history of America are also known as “The Roaring Twenties”. During this era, America depended a lot on the production for economic strength. The American society was divided into two groups; the rich and the poor. Poverty was a major issue of that time as above 60 per cent people lived below the poverty level. The uneven division of wealth between the rich and the poor was the consequence of unequal distribution of funds and resources between agriculture and industry. Hundreds of thousands of Americans became unemployed during the Great Depression. The Great Depression marked the commencement of involvement of the government of America into the society in general and the economy in particular. The decade before 1929 was fairly prosperous and opportunistic for the American people. Then one day, on 29 October, 1929, the Great Depression started with the crash of the stock market. “During the next three years stock prices in the United States continued to fall, until by late 1932 they had dropped to only about 20 percent of their value in 1929” (Nelson n.d.). Panic struck the Americans as the stock prices fell down without any indication of recovery. This caused Americans to start selling their possessions in large numbers while the number of purchasers constantly declined. The stock market that seemed an obvious means to gain financial stability, rapidly transformed into the way to bankruptcy. The first and the foremost sufferers of the crash of the stock market were the banks which had taken money from the public and had invested in the stock markets. Crash of the stock market caused those banks to get closed. Closing of the banks added to the panic of the people of America. In an attempt to save their money by withdrawing it from the banks that were still open, Americans rushed towards the banks. The open banks were forced to close by such a massive withdrawal of savings. The banks were left with nothing to do business from. Lack of the ability of people to recover their savings from the bank after it had closed caused many who could not make it to the banks in time become bankrupt. The failure of banks was so immense that above 11000 of some 25000 bank in America had closed between 1929 and 1933. “[T]hroughout the whole of this period there existed in one of the chief financial centres of the world a lack of balance between long- and short- term investment which was itself conducive to disequilibrium and latent with dangers of extensive catastrophe, should anything occur to disturb the insecure prosperity elsewhere” (Robbins 2007). The Great Depression also affected the business and industry in America. Companies started to downsize and reduce the salaries of their employees after they had lost a major portion of their equity in the bank closures and the crash of the stock market. On the other hand, there was an immense decline in the number of consumers as people controlled their savings, only to spend on things they could not live without rather than things that provided them with luxury. This attitude of the consumers served as a disincentive for the businesses and they were left with no option but to fire the employees and reduce the salaries of the remnants. Some businesses completely shattered and all of the employees were left unemployed. In any of such hard times that preceded the Great Depression, one community that was always able to survive was that of farmers as they at least used to have the stock to feed themselves. The Great Depression was a hard time even for the farmers as their plains were hit by a drought and a lot of powerful storms. The drought is generally known as the Dust Bowl. Grass gradually disappeared as a result of overconsumption and drought. Cyclones shifted the loose dirt away from the fields which caused even the topsoil to be removed. Along their way, the storms caused immense damage to the crops, thus leaving the farmers in turmoil. The biggest sufferers of the community of farmers were the smaller farmers. Their business was already destroyed to a large extent by the invention of tractor even before the Great Depression had showed up. The use of tractor had finished the need of manual labor on the fields. The small farmers were doing business by taking loans from the banks to purchase the seeds so that they could pay the loans back from the sale of the crops. Destruction of the crops not only left these farmers hungry, but also unable to return the loans. As a result of this, banks confiscated the property of many farmers, thus leaving the farmers unemployed as well as homeless. Farmers affected from the Great Depression moved to California in large numbers as there were rumors of agricultural jobs in California. While some farmers did find seasonal work in California, conditions for work were extremely unfavorable for them. Many of these farmers were exposed to racism. They were given derogatory titles and were called such names as Arkies and Okies for the fact that they had come from Arkansas and Oklahoma. The unemployed Americans moved from one state to another in search of work. In those times, very few people had transport. A vast majority of the travelers were without any transport and covered long distances on foot. Most of these travelers were teenagers, but the population of older people was also not insignificant. A lot of families boarded the trains in an attempt to avail any opportunity of employment that they may find along the way. When an opportunity surfaced, the number of applicants far exceeded the available seats. Those who could not find a job stayed in Hoorvilles. It was a shantytown where houses were constructed from any material that was available locally including newspapers and cardboards. Mr. Herbert Hoover was the President of America while the Great Depression occurred. People continued to hold him responsible for the Great Depression to a large extent despite his repeatedly optimistic speeches. Hoover was taken as a title to represent everything that marked the economic downfall of the nation. For example, shantytowns were named Hoovervilles, people turned the empty pockets of their pants inside out and named the pockets “Hoover Flags”. People started to refer to the newspapers as “Hoover Blankets” while “Hoover wagons” were the damaged cars which were pulled by horses. During the Great Depression, people had turned so much against Hoover that he did not stand any chance of winning the presidential election of 1932. As a result of this, Franklin D. Roosevelt became the President of America in 1932. People had associated very high hopes with Roosevelt. Once Roosevelt took the charge, he closed every bank and did not allow any to reopen unless it had stabilized. Roosevelt introduced the New Deal programs. People knew these New Deal programs by their initials. “The New Deal programs created a liberal political alliance of labor unions, blacks and other minorities, some farmers and others receiving government relief, and intellectuals” (WGBH Educational Foundation 2010). These programs e.g. the Agricultural Adjustment Administration (AAA) program was intended to assist the farmers in regaining their lost businesses. Another program; the Works Progress Administration (WPA) program was meant to reduce unemployment by recruiting people for the new projects. A lot of bridges, highways and parks in America today were constructed during the Great Depression in the presidency of Roosevelt who had commenced these projects with a view to putting millions of unemployed Americans to work. These projects were also part of Roosevelt’s New Deal programs. One of the programs that were started by Roosevelt during the Great Depression and have continued to date is the Social Security program. The policies implemented by Roosevelt bore success and Roosevelt became a national hero. People believed in the sincerity and hard work of Roosevelt. Although the New Deal programs started by Roosevelt did a lot to reduce the effects of the Great Depression, yet the economy of America did not improve much until the end of 1930s. The economy of America improved much after the participation of America in the Second World War and the Pearl Harbor bombing. The people of America whole-heartedly participated in the Second World War. With the start of war, Americans were required to participate in large numbers. While men gained training to participate in the war, women stayed back to take care of the factories. They needed to produce food for both local consumption and sending overseas. The Great Depression finally came to an end with the involvement of America in the Second World War. References: Cary Nelson. n.d. About the Great Depression. http://www.english.illinois.edu/maps/depression/about.htm (accessed February 23, 2012). Robbins, Lionel. 2007. The great depression. USA: The Ludwig von Mises Institute. Taylor, Nick. 2012. “A Short History of the Great Depression.” The New York Times. http://topics.nytimes.com/top/reference/timestopics/subjects/g/great_depression_1930s/index.html. WGBH Educational Foundation. 2010. General Article: The Great Depression. http://www.pbs.org/wgbh/americanexperience/features/general-article/dustbowl-great-depression/. Read More