This is a study about the great depression. More specifically, the study will examine what caused the great depression, when it was experienced, and the regions affected by the depression. In addition, the study will explore the consequences and implications of the affected nations. The study will focus on the measures applied to counter the depression.
The great depression was an economic disaster that affected Europe, North America and other industrialized nations for a period of one decade; from 1929-1939. The depression was the worst depression the Western industrialized world has ever experienced in the modern times (McElvaine 46). America started feeling the depression earlier than other countries due to the collapse of the prices of stock market of the New York Stock Exchange in the year 1929. Within the next few years, the stock price continued falling; they lost their value with a decrease of 20%. This decrease in assets’ value ruined countless numbers of investors, and the performance of banks started declining.
Many financial institutions could not withstand the strain from the ensuing depression. People lost trust in the economy and minimized their levels of demand and spending (Burgan 117). Consequently, production declined with a big margin; the overall consequences of these situations escalated the advancement of the great depression. Sudden fall in output led to a deadly situation of unemployment in America because more than fifteen million Americans lost their jobs. Although the utter depression began in the US, it swiftly became an international economic crisis because of the close relationships, which developed between the European economies and US after the First World War (Burgan 117). The US was the chief creditors of Europe during and after the war since the European economies were destabilized by the war debts and the war itself.
Other nations like Germany had suffered heavy economic strains due to defeat in the battle because they were required to reimburse war damages. This connection was extremely tight and close. When the American economy crushed down, the Europeans countries were also affected since the flow of traders and investors to Europe ceased. Unemployment in Germany skyrocketed within a short period claiming the jobs of more than six million people (McElvaine 46). The great depression was a bit soft on Britain because the unemployment levels were not as high as in America and Germany.
However, Britain’s export and industrial sectors were depressed for a longer period that other countries, and they only recovered in the mid 1940s. All countries came up with strategies that would guard the domestic industries and boost their production. Nations imposed tariffs and increased the existing tariffs to discourage international trade (Downing 94). Imports were crowded with quotas; this resulted to a decline in international trade with more than half. When the world trade collapsed, the international economy was disintegrated into trading blocs, which were influenced by currency of trade and political allegiance. This trade between blocs was open to many countries.
Political implications of the great depression
The political implications of the great depression were profound. Countries such as Japan and Germany reacted to the depression by forming militarist governments who came up with regressive foreign policies, which resulted to the Second World War. In Britain and the US, the government intervened in the issues that affected people by forming welfare system for the citizens (McElvaine 47). The government managed all the economies with little intervention from individuals. President Roosevelt came up with employment schemes, which aimed at reducing unemployment. People were given street cleaning jobs and painting the public buildings. Further, Roosevelt came up with policies that supported the industrial and agricultural sectors.
Although these measures did not yield to rapid economic recovery, they enhanced the overall welfare of the American people. Indeed, this was a relief to Americans. The German leader, Hitler, utilized policies that intervened in reducing unemployment in Germany, and by 1936, unemployment was no longer a problem in Germany (Burgan 115). Further, he restricted consumption through trade controls and rationing; the manufacture of machinery and armaments improved the Gross National Product of Germany.
Farm Credit administration (FCA) is an autonomous agency of the executive branch of the federal government, which coordinates and supervises the Farm Credit System for American Agriculture (Downing 97). FCA supply farmers with short term and long term loans to manage and develop their farms and improve agricultural output (Burgan 118). Further, this agency provides the farmers’ cooperatives with financial loans that help farmers run the activities of these cooperatives. Farm Credit Administration was formed under the directives of President Roosevelt; it was mandated to aid farmers in obtaining financial loans (Schultz 75). During that time, the value of farm products had depreciated with a tremendously substantial margin, and it was difficult for farmers to access loans from banks.
The Home Owners Loan Corporation was a program of the federal government, which was formed to give relief to desperate mortgage lenders and borrowers. HOLC purchased mortgages from private lenders and issued the borrowers with new mortgages (Schultz 75). HOLC aimed at softening the terms of mortgages and cutting down the principal debt that was owed. The ultimate aim of HOLC was to maintain a friendly relationship between lenders and borrowers by reducing the rates and charges on mortgages.
The security and Exchange Commission (SEC) came up in 1934 to rebuild the trust of the citizens on the stock exchange due to the enormous depression. SEC maintains public confidence on the stock; it provides company transparency by ensuring that companies give accurate information to the public concerning their profitability (Downing 99). Stock market is a central pillar in the US economy. Therefore, SEC holds a vital obligation of promoting stock transactions. The Civilian Conservation Corps (CCC) assisted youths from relief families to secure jobs since they faced many challenges securing jobs during the great depression. CCC offered young men unskilled jobs in the rural farms that belonged to the governments. CCC was the most famous output of the New Deal Programs because it increased employability and improved the physical conditions of individuals.
The Federal Emergency Relief Administration (FERA) offered grants to the states to run emergency relief programs to the needy people. The chief goal of FERA was curbing unemployment; it provided employment opportunities in the state and the local government during the great depression. These jobs were beneficial to the married men because they restored their esteem of being the breadwinners of their families. The Agricultural Adjustment Act of 1933 (AAA) came up to restrict farmers from excessive agricultural production (Downing 99). The policy was paying subsidies to farmers to avoid planting in some parts of their land. This was done to reduce the surplus of agricultural products in the market. This strategy aimed at raising the value of agricultural commodities.
The National Industrial Recovery Act (NIRA) was an American statute that wanted to authorize the US president to permit cartels and monopolies and regulate the industry, with an aim of achieving economic recovery (Schultz 77). This act was part of Roosevelt’s legislative programs in the new deal. The Tennessee Valley Authority (TVA) is a corporation that is federally owned in the US. The congress formed TVA to provide food control, navigation, fertilizer manufacturing, flood control, economic development and electricity generation in the valley of Tennessee. This valley was affected by the great depression more than other parts of America (Schultz 78). The Emergency Banking Relief Act of 1933 was legislation by Roosevelt to control the banking crisis, which faced America and caused massive closure of banks due to the weight of the great depression.
In conclusion, the enormous depression was the worst economic nightmare the world has ever experienced. The depression ruined many businesses, banks, investments and job opportunities for millions of people. President Roosevelt came up with the New Deal programs and policies that rectified the problem. The world remembers the actions of Roosevelt of restoring the economic might of America through numerous remedial programs.
Burgan, Michael. The Great Depression: An Interactive History Adventure. London: Capstone Press, 2011. Print.
Downing, David. The Great Depression. New York: Paw Prints, 2008. Print.
McElvaine, Robert. The Great Depression: America, 1929-1941. New York: Times Books, 1993. Print.
Schultz, Stanley. The Great Depression: A Primary Source History. London: Gareth Stevens, 2005. Print.