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Complete 8 page APA formatted essay: The Great Depression.Download file to see previous pages... This essay discusses that unprecedented economic recession, the crash in the stock market, shortage of
Complete 8 page APA formatted essay: The Great Depression.Download file to see previous pages...
This essay discusses that unprecedented economic recession, the crash in the stock market, shortage of jobs and insufficiency of opportunity to work were once a reality of American life. The economic and social plight of the American society took place between 1929 and 1939 and got the name of the Great Depression. Describing the phenomenon of the Great Depression, Lionel Robbins, an author of “The Great Depression” and the witness of the event, says: “There have been many depressions in modern economic history but it is safe to say that there has never been anything to compare with this”. Harvey Green, too, calls the Great Depression “the longest and the most severe economic crisis in American history.” The statistics of the unemployment during the Great Depression is striking: it was reported that back in 1933 as many as 30 million people found themselves out of work. The researcher’s goal in this paper is to explore what happened during the Great Depression, discuss how it happened, and what its impact on the American nation was. What caused the most enduring depression in American economy? The authors of “Liberty, Equality, Power” name a few major causes of the stock market collapse and comment on how exactly it happened. As Green says, there cannot be found a single cause of the Great Depression, which came about “because of a confluence of powerful concurrents”. Similarly, John Murrin et al name a few causes of the fatal crash which caused the economic downturn. Those were stock market speculation, mistakes by the federal reserve board, an ill-advised tariff, and a maldistribution of wealth4. Let us discuss the causes of the depression in detail. Stock market speculation was probably the biggest cause of the Great Depression. There was an unprecedented run-up in prices in the New York Stock Exchange in 1928-1929. It was obvious that money was pouring into the market. But in reality the majority of investors bought on a 10 per cent margin. In other words, they were known to put up just 10 per cent of the price of some stock while the rest was borrowed from banks or brokers.5 They wanted to resell their shares in the immediate future at considerably higher prices, so that they could pay back the borrowed money and get some nice profit. They managed to do this for a while, which only made them greedier. As a result, speculation became uncontrolled. The stock market was spiraling upward without any restrictions. Not surprisingly, when creditors started to hesitate about the possible earnings in October 1929 and wanted their money back, they were unable to get it: “the market crashed from its dizzying heights.”6 Also, many authors agree that roots of the depression lie in the Roaring Twenties. For example, Carol Marsh, the author of “The Great Depression and the New Deal” says that the depression was rooted in the dubious situation in the 1920s when many businesses made big profits but farmers did not7. As a result, lots of farmers lost so much at that time that they could hardly pay mortgage on their own farms. This led to financial failure of many banks. To illustrate, in the period in-between 1 July 1928 – 30 June 1929 - the time of the United States’ greatest prosperity - as many as 550 banks had to go out of business8. While the stock market collapse was the cause of the economic downturn, other factors contributed to the lengthy character of the Great Depression. One of the causes, as Murrin et al explain, was the poor decision-making and mistakes made by the Federal Reserve Board9. Specifically, in 1930-1931 it shortened the amount of money that was in circulation in addition to raising interest rates. Credit became really difficult to secure for the general public. Had it been done in the opposite way, the debtors would have been able to pay the creditors and economy would not have been plunged so deep in the ruinous depression10.