|Type of paper:||Essay|
|Categories:||World War 2 The Great Depression|
The great depression all started with the crash of the stock market of 1929, a large market that took at least 25 years to revive. It was then worsened by the dust bowl of 1930. The calamity lasted until 1939, recording the longest and worst depression to be experienced by the modern world, one that enhances basic changes in economic institutions and the economic theory. Compared to the Great Recession of 2007-2009, the GDP (Gross Domestic Product) only declined to 4.3% with unemployment peaking 10% or less (Romer & Richard 2018). The effects were felt globally in that it caused reduced output, increased unemployment rates and severe deflation felt in almost every country internationally. Homelessness was also severe in most parts of the world. There was a 50% reduction in population growth (Rothermund 38). These effects would range from social to economic and cultural disasters, especially in the country of origin, the United States. Its causes ranged from reduced consumer demand, financial panics, and poorly stated government policies. These, along with the gold standard led to the transmission of the entire calamity to other countries.
From an economic perspective, there was human suffering and a lot of changes in economic policy during and after the entire period. There was a major drawdown regarding output and prices. The industrial production of the entire country stagnated during the entire period (Rothermund 38). Deflation was felt while unemployment increased. Banks in the United States failed as a result of the shrinking economy and they could use people's deposits to input more into the stock market and as soon as the people realized the act, and not trusting the Wall Street markets, they rushed to withdraw their savings, leading to the elimination of even big banks in the banking industry.
However, the president at reign during that time, Franklin D. Roosevelt, responded to the global calamity through various New Deal Programs. There were also efforts by Great Britain, which struggled in low growth. However, Britain was not affected much but only saw a decline in industrial production, recording only a third of that of the United States. The currency values of Latin American countries decreased by 40% (Rothermund 9). In Germany, the economy was affected in 1928 after which it revived before worsening again in the next year. Germany felt an equal decline in industrial production with the US. However, other countries including Brazil and Japan exhibited minimal drawdowns (Rothermund 42). Until the gold standard was done with, there was a great recovery from the depression. At the same time, monetary could accelerate the challenge hence, it ensued.
The dust bowl of 1930 altered the social equation of U.S. Farming in the mid-west was destroyed and for at least ten years, many farmers were affected. "World production had been increased by 40 per cent from 1920 to 1929" (Rothermund 43). This occurrence, along with Civil war, led to the fall of prices of agricultural commodities, leaving many farmers hopeless hence, and homeless. On the same social perspective, the wages of the employees at that time fell, leading to the sending of children to orphanages. Income earners would only get 30 per cent of the total of all incomes (Rothermund 49). However, prohibition was repealed, allowing the administration to use taxes from alcohol for boosting the New Deal.
The political domain was also affected as the depression shook the confidence of capitalism. As a result, there was a fail of laissez-faire economics hence, leading to the voting of Roosevelt. This led to a better future for the U.S. as his deal on government spending ended the Depression.
The global impact of the Great Depression led to the rise of WWII (Rothermund 156). Once the New Deal Programs were set up, the GDP growth increased until 1937. However, it is at this time that the government cut back on a New Deal spending hence, a return of the depression leading to more shrinking of the economy. The administration could be concerned to add to the existing debt by the U.S, a mistake that led to the rise of the depression once more. Various politicians could also rely on cuts on taxes and other fiscal policies, which would add to the debt of the nation (Bordo, Goldin, & White 156).
At the end of the depression in 1939, the government spending seemed to ramp up for the WWII but before it, economic growth increased between the years 1939 and 1940. It is at this period that the Japanese were preparing for the war before they bombed Pearl Harbor larking up the war. During World War II, the New Deal and spending proposed by the government saw the economy shift into a mixed economy from a free one. It is at this point that many people including politicians believed that military spending is an asset to a country's economy. Success through the entire period was dependent on new regulations. For instance, in regards to farming, prices would be raised to support farm incomes by indirectly controlling supply hence, altering demand (Bordo, Goldin, & White 12). Even though scholars talk negative regarding the Great Depression, it was a necessary process to see the stability of the economy of approximately every country.
Bordo, Michael D., et al. The Defining Moment The Great Depression and the American Economy in the Twentieth Century. University of Chicago Press, 2014.
Romer, Christina D., and Richard H. Pells. "Great Depression." Encyclopedia Britannica, Encyclopedia Britannica, Inc., 3 Oct. 2018, www.britannica.com/event/Great-Depression.
Rothermund, Dietmar. The Global Impact of the Great Depression: 1929-1939. Routledge., 1996.
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