Example Of Essay On The Great Depression
Type of paper: Essay
Topic: Depression, Great Depression, United States, America, Government, Economics, Investment, Labor
Most of the Americans today are too young to remember the Great Depression; however, no period in American history has more importance to discuss than does the Great Depression decade. Events that happened during the years of the Great Depression determined the direction of the social and economic policies, relationship of the citizens to the government and the political alignments. The period of the Great Depression from 1929 to 1933 started with the crash of the stock market on October 29th 1929 when over $30 billion disappeared in stock values . The Depression served to confirm the poor in their belief that moral considerations ought to have a role in economic practices. It led the people of the middle class to identify their interests and values with those of the poor.
Before the start of the Great Depression, the financial systems of the world’s leading countries had links with one another by the international Gold Standard. Trade between different nations took place on the basis of exchange rates, which fluctuated between very narrow limits. When the Great War put an end to the international monetary unity, the countries not only suspended the rights of effective convertibility, but also resorted to the device of inflation as a means of financing the war . When the countries, such as Great Britain and other British dominions returned to the Gold Standard in 1924, trade revived and incomes rose in the United States. Production took place by leaps and bounds. The stock exchanges of the prosperous centers displayed such a strength, which led to the rise of speculation and proved to be a secure income.
About the end of 1928, when the American lending to Germany started to lose its pace, the centers producing raw materials too showed signs of weakness. In spite of private warnings, rising discount rates and all kinds of unofficial indications, the rise in the prices of the stock values continued, which forecasted that a crash was inevitable. The collapse of the Hatry swindles in London caused a sudden tightening of the markets and by 23rd October 1929, the Dow-Jones index of the price of industrial shares in New York dropped about 21 points . During the next shares, the index further dropped by 76 points and ended the prosperity. The index of security prices, which were 200 dropped to 30-40 and the prices of commodities fell down by 30-40 percent. Production in chief manufacturing shrank by 30-50 percent. In the year 1933, the International Labor Office calculated that over 30 million individuals were out of work .
The conspicuous and more important as an unsettling influence in the depression are the debts of the German and Central European States and municipalities. The total amount invested in Germany in the years 1924 and 1928 was 40 percent on account of the governmental bodies . The easy money conditions created by the boom played a great role in facilitating the rise of the various pools and restriction schemes for agricultural products. The expenditures of the Federal Farm Board, the Reconstruction Finance Corporation and the renewed support to restriction schemes led to the continuation of uncertainty, intensification of the deflation and prolongation of the depression in the United States . The disequilibrium in the labor market due to unemployment on a larger scale forced the Americans into huge debts.
The reduction in the wage rates of the labor and the changing market conditions influenced the living standards of the Americans. The rapid recovery from the Great Depression took place during the World War II when the United States raised the top marginal income tax rate to 88 percent and in the last two years of the war to 94 percent, which was the highest rate in the history of America . The collapse of communism and the complete triumph of consumption were also influential in recovering from the Great Depression. The Federal government, which entered into an alliance with the poor and the middle class during the years of depression, left the labor and the consumers with slingshots to use against the vast array of economic thermonuclear weapons accumulated by the capital . The principle adopted by the central banks for dealing with the financial crisis was to discount freely on good security, but to keep the rate of discount high.
Roosevelt was the key person who played a vital role in recovering the United States from the Great Depression. He urged a competitive tariff for revenue, endorsed the agenda for the imminent international economic conference, with emphasis on the end of trade on the currency warfare, condemned excessive interference in domestic affair, and insisted on federal budget retrenchment . The intra-nationalist theory offered priority to domestic concerns to solve the problems of the nation, such as the relationships between various sections, classes, and economic groups. Roosevelt prohibited the private ownership of gold and the events that followed proved that the measure secured no dollar decline. His abandonment of gold moved the stability of currency to the center stage and threatened a race towards the devaluation and destabilization of sterling, which in turn influenced the value of dollar on a positive note .
McElvaine, R. S. (2010). The Great Depression: America 1929-1941. Crown Publishing Group.
Robbins, L. (2007). The Great Depression. Ludwig von Mises Institute.
Rosen, E. A. (2012). Roosevelt, the Great Depression, and the Economics of Recovery. University of Virginia Press.