Great Depression USA Essay

The great depression is an era that succeeded the First World War and its major characteristic was a great economic crisis witnessed all over the world. The timing of the great depression varied in the various world countries but its effects were similar across the globe. It is a time in history when the world`s economy depreciated to the lowest grid ever in the late 1920s (Burg, 2005:15). During this phase it recorded the highest unemployment levels, the production process in the world almost came to a halt, and a sharp decrease in the stock market prices.

The great depression started in the industrialized North America when the stock market exchange on Oct.29, 1929, commonly known to be ‚ÄúThe Black Tuesday‚ÄĚ (Nick Taylor-American Made). As at this time, the output fell by 23% losing more than ten billion US dollars. The market decline was due to disparity between the consumption and production sectors. The production power was due, but the consumption rate was wanting. The producers had to credit their products resulting to lack of finance to these companies hence a subsequent drop in the wages and loss of jobs for the employees (Stock, 1997:177). Many banks realized great loses some of which even saw their closure because most of them had heavily invested in market shares.

The problem was major in America but it spread to other countries leading to an economic slump due to forged intimate relation that came in between the United States and the European countries to terminate the First World War. Since United States had emerged as the super power of the First World War, its economic back thrash had effects across the globe. The depression persisted up to 1932 when the then president of USA Herbert Hoover realized that he had a hand to lend to terminate the depression. In his speech president, Hoover underrated the crisis and said that it would ultimately end. He did not realize that he had to supply food to the hunger stricken population in North America. People raised blame over him for the big economic crisis (Young and Young, 2007:55). Hoover was turned down and an election was called where Franklin Delano Roosevelt won by a large margin.

After taking over as the president of United States Rosevelt declared a four-day bank holiday meant relief to relief the banks and make them solvent. During the first one hundred days of his reign Roosevelt set good basis too revive the country from depths of desperation. The great depression had adverse effects to the economy as well as the people of United States. The production level dropped greatly as well as the gross domestic product after the recession started. The lack of market for manufactured goods was the main reason for the decline of the production in the United States (Oakes and Kia, 2004:137). The consumers had lost their purchasing power, which was probably due to the effect of the First World War. Most industries had to give their products on credit leaving them with financial crisis. This led to their immediate closure. The collapse of food prices and lack international market for export made farmers lose morale and quit farming.

Credit system in bank declined hence most of the depositors had no option but to withdraw their money from the banks. The experience for the Americans worsened in the 1930s when the agriculture sector leveraged due to the decline in the world market for food prices. The depression also led to lack of jobs in the states. Many people had to move from placer to another hoping against hopes to secure job in the towns. The teenagers comprised the large proportion for the job seeking population. This desperate large population had constructed their houses in shantytown in the outskirts of towns, which they made from any available material. The desperate farmers migrated to California in hope to find fertile grounds. Their condition was seriously transient.

When he came to power, Franklin Roosevelt instilled hope to the States residents .He started the so-called new deals to revive the economy of United States. The main objective of Roosevelt was to identify the problems facing the states and look for possible solutions. The new deals established by Roosevelt were hasty put into action and were not subject to criticism (Downing, 2008:71). In fact they were hastily executed though they were weakly administered. The process started by first declaring closure of all banks, which were to re-open once they were solvent.

The country had high levels of unemployed persons who roamed all over in search for jobs. Roosevelt took an immediate step and formed CCC to bring relief to the young people who were between eighteen and twenty five years (Ohanian, 2010:4). This project saw about two million young persons being absorbed into the various projects across the country. To rehabilitate the agriculture sector Roosevelt established an adjustment congress called AAA, which financed the farmers. The congress also worked to raise the food prices. The farm income increased substantially within a span of three years. The farmers were encouraged to assume other large money generating projects (Romer, 1993:21). These enabled the industries realize a profit increase of about fifty percent within the three years.

In the attempt to revive, the industry sector Roosevelt assigned the establishment of NRA a congress that would diminish the cutthroat competition amongst same line businesses. The congress set some policies that would ensure a healthy competition amongst the companies. The labor market organized itself during this New Deal era and made the largest profit ever in the American history. The major benefit realized in the congress was the bringing together of all the workers and grow common interest in them which even had political connections (Schwartz, 2010:51). Democratic Party was more famous compared to the Republican Party amongst the workers.

In his entire endeavors president Roosevelt meant to set solidarity in the economic and social sectors. He embraced democracy in all his speech and promised to ensure democracy for all as long as he was in powers (Christiano, Motto, and Rostagno, 2004:32). This saw Roosevelt to power for another term even after the republican nominated Alfred M. Landon to oppose him. In his second reign, Roosevelt strategized to rebuild a military base that had fallen during the First World War (Bernanke, 2004:45).

The depression had had impacts to other countries. Countries like Germany and Japan gained an intense power from the depression that made them to verge for the Second World War. Hitler in Germany adopted inventory policies that completely eradicated unemployment in Germany. Hitler also observed other policies to reduce inflation rates; he restricted trade controls and rationed business interactions with other countries (Parker, 2002:187). This saw Germany increase its GDP by more than fifty percent. The case of Germany almost gives a clear picture of what was happening in other nations across the globe. Although global depression was overwhelmed, there are still considerable international cost on relations and political rheum.


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Schwartz, A.F. 2010. Housing policy in the United States. New York: Taylor & Francis.

Stock, C.M. 1997. Main Street in Crisis: The Great Depression and the Old Middle Class on the Northern Plains. Carolina: UNC Press Books.

Taylor, N. 2012. The great Depression. New York Times.

Young, W.H. and Young, K.N. 2007. The Great Depression in America: a cultural encyclopedia, Volume 1. Westport: Greenwood Publishing Group.

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