To What Extent Did the Causes of the Great Depression Originate within the United States of America - Coursework Example

To what extent did the causes of the Great Depression originate within the United s of America? Introduction The Great Depression holds a significant position in the history of America as it proved to be a turning point for many businesses and people in the country. Although, it is thought to span over a period of ten years starting from 1929; various contributors of the recession started taking shape during the earlier years (Berton, 2001). A major factor that aggravated the economic conditions was the stress and anxiety among public members that prevailed widely during these hard times. Another prominent cause that ultimately caused food deprivation was a prolong spell of drought that continued during the preceding years (Bernstein, 1989). It should be understood at this point that the causes of recession were multiple and so were their manifestations. A variety of other causes also contributed to the aggravation of recession as is discussed below. Discussion A deeper insight into the history of Great Recession reveals that multiple factors that originated within America contributed to the recession. The accumulation of causative agents was not sudden; instead the various causes continued to arise one after the other and ultimately resulted in devastation of the economy at the national level (Olson, 2001). Interestingly, the effects of American recession were also felt by other countries and many of them contributed to this aggravation by simply reacting to the ongoing recession. Some of the most important causes are discussed below; 1929 Stock Market Crash America witnessed a stock market crash on October 29, 1929. This was a shocking incident for the nation and it proved to be one of the many causes that subsequently resulted in a cascade of events leading to the Great recession. The condition continued to aggravate with the passage of time and within only two month, stockholders’ lost amounted to $40 billion (McNeese, 2010). Despite repeated and continued attempts by the Americans to revive the dying stocks, the condition continued to aggravate and ultimately culminated to what is known as the great recession. Bank Failures Failing banks were another cause that contributed to the recession. At that time in history, the deposits in banks used to be uninsured. For this reason, when the banking system started to collapse, people started losing their savings simultaneously (Rothbard, 1963). The panic and anxiety which was widely prevalent at that time forced the banks to change their policies. Most banks therefore opted to adopt a safe approach in order to protect their own and customer’s interests. A prominent change was the unwillingness of banks to create loans; a major driver of business. Many banks that were unprepared for the ongoing challenges had to close their business activities due to looming economic darkness (Saint-Etienne, 1984). Spending habits Another cause that aggravated the scenario was the spending habits of common people. Keeping in view the aggravated economic conditions, people became extremely uncertain about their future. This uncertainty forced them to alter their spending habits; a general tendency therefore was to conserve capital instead of spending it (Anderson, 1959). The ultimate consequence of all this was reduced sales and closure of many businesses. The manufacturers of products were forced to slow down their production and for this reason many production units closed. The workers and specially the labor class of the society was therefore forced to leave the manufacturing units. Another negative effect of this process was the state of joblessness that then became widely prevalent. With the passage of time therefore, unemployment rate started rising, so much so that at one point it touched the 25% mark (Skousen, 2013). This was extremely worrisome for the Americans and soon became a cause of concern at the national level. The role of government policies Due to the ongoing economic turmoil, government was forced to implement a number of policy changes. Keeping in view the conditions of local manufacturers, the government reacted by trying to safeguard their interest. For this purpose Smoot-Hawley Tariff was introduced in 1930; the idea was to increase the duty on import of goods from other countries (Beaudreau, 2004). Although this move was directed at improving the economic conditions of local manufacturers, foreign countries retaliated by taking counter-measures to prevent their own losses. Their only option was to limit their business with America. The ultimately result of all this was a marked reduction in the volume of trade between America and the other countries; a factor that contributed to the recession. Drought and its effects Since food is one of the main necessities of life, any deficiency in the production of food can disturb the lives of a population significantly. Deficiency of food products may be regarded as a direct cause of the economic recession, since its effects were huge enough to impact the economy on a massive scale. The 1930 era witnessed a prolonged drought and left the peasants literally crippled (Burkhalter, 2010). The food production was so low that most farmers were unable to pay their taxes. Many others were forced to sell their lands to others in order to pay their debts (Leab, 2014). In some cases, the farmers were not even able to harvest their crops; therefore the crops were left on the lands waiting to get destroyed. On the other hand, there were regions in America where people were dying of hunger. Death of people due to drought contributed further to the panic that was widespread at that time. Conclusion From the above discussion, it can be concluded that the various causes of Great Depression originated from within the American land and ultimately became so widespread that they engulfed the whole economy within a few years. Instead of thinking the causes as being isolated events, they should be regarded as being closely interconnected events that took place one after the other, and ultimately culminated into a phenomenon that is today known as the Great Recession. From the discussion, it is clear that the influence of other countries in this regard was minimal. In most cases, the response of other countries was ‘reactive’ instead of being ‘proactive’. Such moves may not be regarded as being the causative agents of this recession. References Anderson, N. (1959). The urban community: A world perspective. New York: Holt. Beaudreau, B. C. (2004). Mass production, the stock market crash, and the great depression: The macroeconomics of electrification. Lincoln, NE: Authors Choice Press. Bernstein, M. A. (1989). The Great Depression: Delayed recovery and economic change in America, 1929-1939. Cambridge: Cambridge University Press. Berton, P. (2001). The Great Depression 1929-1939. Toronto: Anchor Canada. Burkhalter, B. B. (2010). The Generation That Saved America: Surviving the Great Depression. Bloomington: AuthorHouse Pub. Leab, D. (2014). Encyclopedia of American recessions and depressions. Santa Barbara: ABC-CLIO. McNeese, T. (2010). The Great Depression, 1929-1938. New York: Infobase Pub. Olson, J. S. (2001). Historical dictionary of the Great Depression, 1929 - 1940. Westport, Conn. [u.a.: Greenwood Press. Rothbard, M. N. (1963). Americas great depression. Princeton, N.J: Van Nostrand. Saint-Etienne, C. (1984). Great depression, 1929-38: Lessons from the 1980s. California: Hoover Institution Press. Skousen, M. (2013). Economic Logic. New York: Regnery Publishing. Reflection Writing this assignment was an interesting venture that provided an opportunity to learn about the subject while grasping the concept of presenting academic content in a neat manner. Academic writing demands that the subject be presented in a form that not only enriches the intellect of reader, but also contributes to the prevailing knowledge base. Moreover, the information should be easily understandable by the reader to allow easy grasp of the subject. When I started writing this paper, I was not aware about the causes of Great recession. Neither was I aware of the history of Great recession. For this reason, my initial response was to search for the ‘how’, ‘when’ and ‘why’ aspects of the subject. To start with, I started experimenting with keywords like ‘Great recession’, ‘history of great recession’, ‘introduction to great recession’ and the likes. This provided me the required information about the historical aspects of Great recession. For me it was shocking to learn that this recession actually lasted for about a decade; a time period that can actually wipe out the economically compromised population from an area. After going through the history of Great recession, I started looking for various books that discuss the subject of Great recession and its causes. Some texts that I found were more inclined towards the idea that the Great recession was in fact due to the foreign influences on America. These were not in alignment to the notion that I was willing to write about. So, I changed my search words to filter these results and get the most relevant results. I selected a total of 15 resources that were in accordance to the requirements of my assignment. I made a list of these books and then started reading them one by one. Out of these 15 books, I chose 10 for use in my assignment. Interesting to note was the fact that there actually were a few measures that were adopted by the American government to bring about a positive change; but they proved disastrous in the long run. For naïve researchers like me, it is encouraging to learn that mistakes may be made by anyone at any time; all we should do is to learn from our past mistakes to bring about a positive change in our future.  Moreover, we are always wise in retrospect! I decided to focus my attention on the most prominent causes; an approach that simplified my job, while ruling out the minor or unimportant causes. So, when I started writing on the subject, I was clear that I had to focus on 5 main causes only. To avoid confusion and to provide ease of reading, I arranged the paper into a number of headings that allow the reader get a clear picture of the content of the paper. The resources provided for the purpose of referencing the paper proved extremely useful since they provide clear guidelines in this regard. Overall, my experience has been extremely satisfactory and rewarding and I feel that I have learnt a lot about this subject.  Read More