The Story of The Great Depression

The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in the 1930s and lasted until the late 1930s or middle 1940s. For more than a decade, America's free-market economy failed to operate at a level that allowed most Americans to attain economic success. While the Great Depression brought about widespread unemployment, collapse in investment and credit, bank failures, and reduction in purchasing across the board, John Maynard Keynes did well to propose specific solutions to these issues. Specifically, Keynesianism, which was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression, called for expanded management – Keynes proposed that government manage investment and expectations. As capitalism was failing America, Keynesianism offered the hope no one was able to find during such rigorous times.

The story of the Great Depression can be told just as simply with statistics:

By 1933, the country's GNP had fallen to barely half its 1929 level. Industrial production fell by more than half, and construction of new industrial plants fell by more than 90%. Production of automobiles dropped by two-thirds; steel plants operated at 12% of capacity. During Herbert Hoover’s presidency, more than 13 million Americans lost their jobs. Unemployment capped at 24.1% in 1933, and did not drop below 14.3% until World War II. The financial meltdown initiated by Wall Street's Great Crash of 1929 caused billions of dollars in assets to vanish. Wealthy Americans – who owned almost all the nation's stocks at the time – were struck by an 80% decline in the...

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...and credit, bank failures, and reduction in purchasing across the board. Few economists at the time could see little hope in this ever-despairing, ever-enduring economic downfall; however, John Maynard Keynes rose among the few to offer an answer to the world’s questions. Keynes’ theories are sound, they are legitimate, they are smart, and they were, and still are, most definitely viable answers to the Great Depression. Yet while John Maynard Keynes did well to propose specific solutions to these issues, these solutions are seemingly more effective in theory than in practice.

Works Cited

"Chapter 4: The Great Depression and the Keynesian Solution." Chapter 4: The Great Depression and the Keynesian Solution. N.p., n.d. Web. 23 Apr. 2014.

Shmoop Editorial Team. "Economy in The Great Depression." Shmoop.com. Shmoop University, Inc., 11 Nov. 2008. Web. 22 Apr. 2014.