The Effects of the Great Depression - Report Example

The Effects of the Great Depression INTRODUCTION In the late 1920s, some of the countries in the Western block began confronting a dramatic and economic downturn that affected millions of people in different countries, especially in the United States and some of the European countries. This economic downturn has been referred as the Great Depression, which will always be considered one of the drastic events of the twentieth century. October 29, 1929 is referred as the Black Tuesday by a number of historians and experts, as it brought the stock market crash in the United States, which began the Great Depression in the country. Most of the industrialized world had a very severe impact due to the depression. This drastic event resulted in the sharp decline of international trade, as well as, quick reduction in the incomes and profits of ordinary people in these countries. Countries with heavy industries were hit hard by the depression, which resulted in a huge wave of unemployment that starved millions of Americans out of their homes. A number of companies reported halt in the construction sector, which resulted in the firing of thousands of construction workers. In addition, more than fifty percent of decline was observed in the prices of crops that had a very severe impact on the farmers and people of rural areas. Some of the most suffering areas were farming, mining, and logging in the United States. (Parker, pp. 40-41) At that time, the United States was served by the President Herbert Hoover. After the stock market crash, people persisted optimism, as people expected prosperity due to the usual coming and going of depression in the country. In response to the Great Depression, relief programs were set up by the governments; however, some sort of political turmoil resulted in mismanagement of such programs. In the result, nationalist demagogues began in various states of the countries that were started by the desperate and unemployed Americans. (Cohen, pp. 20-22) The Great Depression was not occurred at a sudden. The stock market began coming down gradually; and as prices came down, people started to purchase more stocks, in order to acquire greater profits. However, the Black Tuesday disappointed thousands of Americans that became bankrupt due to total collapse of the stock market. In early 1930, sufficient credit was available to the people at low rates; however, new debt was not preferred by the American people due to their reluctance. In the month of May, automobile market confronted a sharp decline in the prices, which affected thousands of salespersons and consumers in the country. In general, decline was observed in the prices of consumer products. Until the 1930, wages were steady; but they also dropped in the year 1931. As earlier mentioned in the paper, American farmers were the worst victims of the Great Depression, as they confronted the worst situations during the depression. The Great Depression in the United States affected peoples of different other countries, as the United States was considered the biggest creditor after the World War I. The decline of American economy resulted in the paying back of money to the United States, which resulted in the sharp decline of economy of other countries, especially Denmark that had a very devastating effect. (Smiley, pp. 77-78) CAUSES Now the paper will try to discuss one of the major causes of the Great Depression in the United States, which will facilitate the better understanding of effects of the event. In this regard, the Great Depression was caused in the country due to a huge wave of heavy debts. In the 1920s, cheap credit was the major reliable source of most of the American consumers and businesses. Automobiles, furniture, and other consumer goods were purchased by acquiring cheap credit from the banks by American people. On the other hand, capital investments were acquired by American businesses for increasing their production. In the result, a consumer and commercial debt started to increase, which was fueling a strong short-term growth of the American economy. Experts have noted that default was even risked by the American people, as the demand of their products began to decrease during the price deflation process. Payments were paid on time by these consumers, as their current spending was cut drastically. (Smiley, pp. 59-63) In the result, demand for the new products was decreased that plunged thousands of orders, especially in the construction sector. In addition, more than thirty percent of US banks showed massive unemployment rates due to nonpayment of their financed debts. Moreover, such period observed beginning of massive withdrawals from the banks due to their concern about their deposits. Ineffectiveness was observed in case of banking regulations and government guarantees that proved not to be working. In the result, billions of dollars were lost by the banks in terms of their assets. In response, capital reserves were built by the banks and fewer loans were given by the banks, which resulted in the intensification of deflationary pressures in the country. In other words, acceleration was observed in the downward spiral that resulted in the Great Depression of 1933 and affected millions of Americans in the United States. EFFECTS Human suffering is considered one of the economic impacts of the Great Depression in the country. Standards of living of millions of Americans were dropped abruptly. In the early 1930s, industrialized countries confronted a huge wave of unemployment that left millions of people hungry and thousands of people killing themselves, in order to acquire insurance amount for their families after their death. While the period of mid-1930s observed little improvement, end of the 1940s did not observe total recovery from the depression. Moreover, world economy was also affected by the depression, as the international gold standard ended during this period. In the United States, decade from the year 1930 observed doubling of union memberships, which was caused by the devastating rate of unemployment, as well as, the implementation of the National Labor Regulations Act of 1935 in which, collective bargaining was encouraged by the government. In order to avoid any more effect, the Social Security Act was passed in the year 1935 that compensated unemployment in the country through insurance of old aged people and survivors. By the year 1933, millions of ordinary Americans confronted unemployment, and most of the American cities witnessed long lines for the food. In addition, search of food, work, and shelter tend thousands of people to roam around the country. (Himmelberg, pp. 26-28) During this period, an effective step was taken by the government in form of the Civilian Conservation Corps that facilitated American youth in a semi-military manner. Jobless young men were recruited by the corps and paid approximately thirty dollars per month. According to the reports of that decade, the program was attended by more than two million young men in different states of the country. Combating soil erosion, maintenance of national forests, elimination of stream pollution, conservation of oil deposits, and similar conservation projects were included in the effective program that enabled thousands of young American men to support their families. (Singleton, pp. 37-39) Moreover, the Great Depression resulted in the breaking down of thousands of families in different states of the country. Middle class men were the major victims that were affected economically, as well as, psychologically due to the devastating event. No social sense regarding the depression was known by these men, and their unemployment was taken as their personal failures, which resulted in suicides of hundreds of Americans. One of the reasons of suicides was insurance that could save their families after the death, as earlier mentioned in the paper. In the result, 1930s reported the highest number of deaths in the United States, and the Great Depression was somehow responsible for such statistics. Some of the stories were so depressing that they made people cry, and the Great Depression was responsible for the formation of a wave of depression and mental stress in the American people that influenced the society for almost a decade. Eleanor Roosevelt, the First Lady received thousands of letters from the needy Americans, as she was known for her generosity and kindness during this period. A seven-year old girl wrote a letter to her asking for clothes, as she was not allowed to attend school due to her torn clothes. (Cohen, pp. 23-25) Some people wrote letters for jobs, as they were not able to support their families, and not even provide them food and shelter. All such stories created a depressed society, which affected the United States, and especially, ordinary Americans due to the Great Depression of the 1933. Conclusively, it is hoped that the paper will be beneficial for the students, teachers, experts, and nonprofessionals in the better understanding of the causes and effects of the Great Depression. Works Cited Gene Smiley. Rethinking the Great Depression. National Book Network, 2003. Jeff Singleton. The American Dole. Greenwood Publishing Group, 2000. R. E. Parker. Reflections on the Great Depression. Edward Elgar Publishing, 2002. Robert Cohen. Dear Mrs. Roosevelt: Letters from Children of the Great Depression. UNC Press, 2002. Robert F. Himmelberg. The Great Depression and the New Deal. Greenwood Publishing Group, 2001. Word Count: 1437 Words Checked by Copyscape.com and Turnitin.com Read More