the Great Depression
The Great Depression
from 1929 to about 1939 was the time US nation really struggled economically. The
Great Depression was unlike any recession in the recent times. It was the worst
decline in economic in the history of the industrialized
Western world. Debates are still going on what cause The Great
Depression. Some say the growing income and wealth inequality played a role.
Others say that the increase in Consumer Debt in the 1920’s caused by a shift in
consumer-oriented businesses, such as
automobiles. Unemployment was raised to above 25%. A quarter of the workforce
was without jobs by 1933 (around 15 million Americans). Because of that many
people became homeless. 50% of all banks in the US failed. GDP was almost cut half from $104 billion to $54
billion. And the stock market lost 2/3 of its value.
Leading to the Great Depression
It was when ‘stock
market’ crashed on 24, October 1929, (crash on Wall Street) which marked the
beginning of the economic recession, the Great Depression in the US, which is
known as “Black Thursday”. On ’29-October-1929′ the stock market
collapsed. And the day was well known as “Black Tuesday”. It was the day when
all the price of stocks collapsed completely and $14 billion was lost. It went
on to the next week which made another $30 billion lost.
During the 1920’s, a
rapid expansion undergone in the U.S. stock market, reaching its top tip in
August 1929. By that time, the production had already hit the bottom. The
unemployment had increased, which left stocks in a great surplus of their real
value. The other causes of the ultimate market collapse were low wages given to
the employees and an excess of large bank loans that couldn’t be put into
in the debt for the country people was found. Stock prices started
to diminish in September and October 1929. On 24-October-1929, Black Thursday, a
record of around 12.9 million shares was traded. Millions of shares became
worthless. Those investors who had bought stocks with borrowed and appropriated
money were wiped out completely. This led to many people who invested all their
wealth and money commits suicide.
By the year 1932,
stocks which were so worthy in the year 1929 came to only about 20 percent of
their value. The crash of stock market 1929 was not the only reason for the
Great Depression, but it acted to speed up more rapidly for the global economic
fall down. Every person had started to adjust to a different way of making
living than what they were all used to do before the Great Depression. The
nation’s wealth grew by billions throughout the 1920’s. But the distribution
was not held equally. The top 1 or 2 percent received a 70 to 75 percent
increase in their DI (disposable income). And the remaining 98 to 99 percent saw
an average 9 percent increase in their DI. There were no savings for almost 3/4
of all Americans with them.
The other cause of
the Great Depression is the ‘overproduction’ in industries. All factories were
producing products, but the wages for workers were not rising up. Too few
workers could afford to buy the factory output. The excess products couldn’t be
sold to a foreign country due to high tariffs and lack of money in Europe. There
was no adequate food and supplies. No proper shelter and medical treatment
during the Great Depression.
It was seen that millions of men left their own families during
the period. Children and wives were left with no money. Those who lost their
homes during the period lived in small towns. During this period, nearly all
nations worked towards to protect their domestic production. It was done by
imposing tariffs and setting quotas on foreign imports and exports. These protective
measures were done to a great extent reduce the volume of international trade.
The other reason is the weak banking system that prevailed during that period.
H. Hoover and F.D
Roosevelt were the President of the US at
the time of the Great Depression. Hoover believed that during the period economy
by itself will be corrected and so on. Roosevelt played well and an active
role. He bought a series of government initiatives and programs. It was known
as the “New Deal”.
It tried to help all
affected Americans to cope up with the Great Depression. Regardless of government
helps and efforts, until the early 1940’s the Great Depression continued. The
Great Depression came to an end with America’s entry into WW-II (Japanese
attack on Pearl Harbor in 1941) and the creation of thousands of jobs
associated with WW-II, a huge level of
armaments production for the War. This led to all the nation’s factories go
back into full production mode.
America sided with
France, Britain and the Soviet Union against Japan, Germany and Italy. More workers
were needed in factories to produce ammunition and armaments. The “New Deal”
mainly aimed to reduce unemployment by work-creation programs such as street cleaning
and the painting of public property etc for unemployed people. The
Tennessee Valley Authority (TVA), Public Works Administration
(PWA), electric power is some of the examples of these public works
initiative or projects.
The end to the Great
Depression came when the US entered the war in 1941. WW-II broke out in 1939
and the US entered the disputes on ‘7-December-1941’. It was when the Imperial Japanese
Navy Air Service gave a surprise military strike on US Naval base at Pearl Harbor.
This attack was known as “Battle of
Pearl Harbor”. This led the US to enter into WW-II. This attack almost killed
2,300+ Americans and causing other damages to the country. This finally
brought back the country out of the Depression after a long period of more than
ten years of distress. All factories in the
nation went back in full production mode. Then the economy started to become