The Great Depression

The Great Depression

Length: 944 words (2.7 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
Great Depression was one of the most severe economic situation the world had ever seen. It all started during late 1929 and lasted till 1939. Although, the origin of depression was United Sattes but with US Economy being highly correlated with global economy, the ill efffects were seen in the whole world with high unemployment, low production and deflation. Overall it was the most severe depression ever faced by western industrialized world. Stock Market Crashes, Bank Failures and a lot more, left the governments ineffective and this lead the global economy to what we call today- ‘’Great Depression’’.(Rockoff). As for the cause and what lead to Great Depression, the issue is still in debate among eminent economists, but the crux provides evidence that the worst ever depression ever expereinced by Global Economy stemed from multiple causes which are as follows:

Stock Market Crash:
Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA. However, in order to stop increasing prices of Stock, the Federal Reserve raised the interest rate sof loanabel funds which depressed the interest sensitive spending in many industries and as a result a record fall in stocks of these companies were seen and ultimately the stock bubble was finally burst. The fall was so dramatic that stock prices were even below the margins which investors had deposited with their brokers. As a reuslt, not only investor but even the brokerage firms went insolvent. Withing 2 days of 15-16 th October, Dow Jones fell by 33% and the event was referred to Great Crash of 1929. Thus with investors going insolvent, a major shock was seen in American aggregate demand. Consumer Purchase of durable goods and business investment fell sharply after the stock market crash. As a result, businesses experienced stock piling of their inventories and real output fell rapidly in 1929 and throughout 1930 in United States.

How to Cite this Page

MLA Citation:
"The Great Depression." 123HelpMe.com. 17 Aug 2018
    <https://www.123helpme.com/view.asp?id=251685>.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

The Great Depression and the New Deal Essay

- Great Depression The Great Depression and the New Deal In response to the Stock Market Crash of 1929 and the Great Depression, Franklin D. Roosevelt was ready for action unlike the previous President, Hubert Hoover. Hoover allowed the country to fall into a complete state of depression with his small concern of the major economic problems occurring. FDR began to show major and immediate improvements, with his outstanding actions during the First Hundred Days. He declared the bank holiday as well as setting up the New Deal policy....   [tags: Great Depression]

Research Papers
986 words (2.8 pages)

The Great Depression Essay

- Many adolescents, In the Great Depression, received the full affects and suffered. Some were left hungry, impoverished, and hopeless, how are adolescents today compared. The 30’s were a time of great distress for many Americans. Events such as the stock market crash, an economy suffering from being inflated, overuse of credit, a farming crisis, and other events led America to the economic downfall known as the Great Depression. During the great depression, the unemployment was high, the wages were low, lines stretched around the city for food, families that lost their house had to live in makeshift homes in communities called hoovervilles, and children had to stop school to work for money....   [tags: The Great Depression ]

Research Papers
1059 words (3 pages)

Essay on The Great Depression

- The Great Depression When a person hears the words “The Great Depression,” almost everyone thinks of the worst economic times in the United States. The Great Depression started in the late 1920s and continued on until the early 1940s. It is known as being “the deepest and longest-lasting economic downturn in the history of the western industrialized world” (History.com). We can learn from the occurrences during The Great Depression that government involvement is the deciding factor of whether an economy will expand or continue to shrink during a recession....   [tags: Economy, Great Depression ]

Research Papers
1596 words (4.6 pages)

The Great Depression and the Dirty Thirties Essay examples

- There were many causes of the Great Depression (need help on the first sentence). Yes, the stock market crash was a main reason of the Depression, but it actually began long before that, with the Roaring 20’s. With such a large disparity between the rich and the poor, the overproduction of goods (too much too quickly), and people racing to buy stocks, it was only fitting that it would soon come to an end. Before it actually crashed, the stock market played an important factor leading up to the Great Depression as well....   [tags: great depression, roosevelt]

Research Papers
999 words (2.9 pages)

Essay on The Ingredients of the Great Depression

- The Great Depression originated in the United States with the stock market crash on October 29, 1929. The depression was the biggest economic fall in American’s history. This crash stretched throughout the globe and affected the rich as well as the poor. There were many causes that assisted in bringing the depression into existence. However one of the main causes was the disproportionate riches during the nineteen-twenties. The gap between the rich and the working class people was the enlarged industrialize production during this period....   [tags: Great Depression, USA, history,]

Research Papers
539 words (1.5 pages)

Causes of the Great Depression Essay examples

- In the 1920s, American economy had a great time. The vast majority of Americans in 1929 foresaw a continuation of the dizzying economic growth that had taken place in most of the decade. However, the prices of stock crested in early September of 1929. The price of stock fell gradually during most of September and early October. On “Black Tuesday” 29 October 1929, the stock market fell by forty points. After that, a historically great and long economic depression started and lasted until the start of the Second World War....   [tags: great depression, USA, history, ]

Research Papers
653 words (1.9 pages)

A Comprehensive Examination of The Far-Reaching Effects of The Great Depression

- The Depression affected the varying economic and social classes in different ways. The experience of the Depression obviously had a negative impact on the country as a whole but some groups of society were still able to flourish. In addition to economic and social class, geographic location also played a role in experience of Americans during the Depression. Those unlucky citizens that lived in the Great Plains states were also dealing with the effects of the Dust Bowl during this time. Some citizens were lucky enough to find themselves working in Depression proof jobs such as the cigarette and shoe manufacturing industries (Kennedy, p....   [tags: The Great Depression]

Research Papers
1349 words (3.9 pages)

Essay about Understanding the Great Depression

- It was in 1929 that industrial production declined, business slumped and depression began in the United States. Rising unemployment, falling incomes, increasingly underutilized capacity, the drop in primary-product prices and the collapse of international trade combined to depress the international economy. Property owners felt depressed because their assets were shrinking, manufacturers had to deal with declining sales, building operators experienced a crippling lack of demand, railroad managers were desperate because fewer people utilized the rails, farmers were ruined by deflated prices, wage-earners were facing unemployment and successive wage cuts....   [tags: Great Depression Essays]

Research Papers
2827 words (8.1 pages)

Causes Of The Great Depression Essay

-      In 1929 the stock market crashed, triggering the worst depression ever in U.S. history, which lasted for about a decade. During the 1920s, the unequal distribution of wealth and the stock market speculation combined to create an unstable economy by the end of the decade. The unequal distribution of the wealth had several outlets. Money was distributed between industry and agriculture within the U.S.; in social classes, between the rich and middle class; and lastly in world markets, between America and Europe....   [tags: Great Depression History Economy Essays]

Research Papers
1684 words (4.8 pages)

Great Depression Essay

- The Great Depression During the 1920’s America was experiencing great economic growth. As WWI was ending Americans were out of energy. For almost 100 years they had been facing the problems of sectionalism, civil war, reconstruction, imperialism, and WWI. By the end they were ready to just sit back and party. Demand sky-rocketed and brought great economic growth. Americans failed to see the great problem looming overhead though. The Great Depression was caused by a combination of factors- a natural slowdown of the business cycle, weaknesses of the 1290’s economy magnified the slowdown, the republican response failed to help, a great environmental disaster, and the collapse of the world eco...   [tags: US history great depression 1930]

Research Papers
1172 words (3.3 pages)



The Gold Standard
Apart from stock market crash, there are some other section of economists who believe that the Great Depression was the cause of ill effects of abandoning Gold Standards. After World War I, many countries, both new and existing abandoned the use of Gold Standards and adopted flexible currency system so they could print the curreny to pay for the war effects. Although, US had not abandoned the Gold Standard in its economy but still there is ongoing debate about the role of gold standard in limiting U.S. monetary policy but there is no question that it was a key factor in the transmission of the American decline to the rest of the world. (Romer)

Of all the economies, it was the Great Britian which was largely affected by the Gold Standard. After it abandoned the use of Gold Standards in 1925, Britian decided to return to Gold Standard at pre war parity. Going back to pre war parity means adopting low prices in the economy, low output and high unemployment. Thus, with increase in interest rates not only British Economy but other economies which were dependant on pound sterling and British Capital Markets were largely affected and a substantial decrease in consumer spending was seen which was obvious because of high unemployment. However, the effect was not only restrained to Britian but also in other countries that relied on the pound sterling and British Capital Market for their financing and thus deflation spread to rest of the world. Later, on Spetember 19th, 1931, the british government decided to go off the gold standard and pound sterling depreciated by one third of its value on the foreign exchange market. Thus, it was all because of first collapse and then restoration of gold standards that accelerated the great depression in the global economy. Also for US Economy, once it began to contract severely, the tendency for gold to flow out of other countries and toward the United States intensified. This took place because deflation in the United States made American goods particularly desirable to foreigners, while low income reduced American demand for foreign products. The result was a decline in output and prices in countries throughout the world that also nearly matched the downturn in the United States.


Sudden Fall in Credit from US:
Post World War I, US economy invested heavily in new and growing sectors of Europe and Gemany through Foreign Direct Investment. However, at times of stock bubbles burst and with mass insolvency of US firms, the flow of credit by US economy to other nations were largely reduced and as a result, rest of the world saw a drastic fall in their output levels. The effects of reduced foreign lending may explain why the economies of Germany, Argentina, and Brazil turned down before the Great Depression began in the United States.

Why did Great Depression last so long?
The Great Depression lasted for around 10 years from 1929 to 1939. Many economists and scholars argue that it lasted for more time than it should have. After 1933, the global economy saw a rise on output levels, stable liquidity and increased consumer demand as Federal Reserve was now more than its currency base. Thus, desite of such positive factors, depression extended till 1939 and the reason for the same was inefficiency of economic programmes launched by President Roosevelt to restore prices to pre-depression levels. Also the labor rates/wages were well above the sustainable level. However, it was only during the end of 1930’s when the policy of NIRA was replaced with Taft-Harley Act and thus labor hours began to rise. Further, the industrial wages were back in line with productivity and market trends and per capita hours worked were back to their normal level and depression was finally over in late 1939. (Ohanian)


Works Cited
Ohanian, Lee E. Why Did The Great Depression Last So Long? 5 January 2009. Web. 12 December 2013.
Rockoff, Gary M. Walton. Hugh. History of the American Economy. USA, 2014. Web.
Romer, Christina D. "Great Depression." Research Paper. 2003. PDF Document.
Return to 123HelpMe.com