The Worst Economic Downturn in the History

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The Great Depression- this was the worst economic downturn in the history of the industrialized world. In the year 1929, there was a crash in the stock market, which lasted until 1939. This sent” Wall Street into a panic and wiped out millions of investors “(history.com).

One of the causes of the great depression is the “U.S. economy expanded rapidly” (history.com). This happened during the “Roaring Twenties”. Due to the great depression, the consumer spending dropped as well as the investment. Many companies laid off their workers, this is because there was a steep decrease in the industrial output. This was “longest most severe depression ever experienced by the industrialized Western world, it caused changes in economic institutions, macroeconomic policy, and economic theory” (Britannica.com).

Macroeconomic policy is the study of the behavior of a national or regional economy as a whole; an economic theory is a broad concept for the explanation and understanding of the movement of goods in a market. The great depression caused deflation in almost every country of the world; however, it lasted longer in Europe as well as Latin America and Japan. In the United States, consumer demand had a decrease, which led to an economic output (brtiannica.com).

The gold standard- is the monetary system in which the standard unit of currency is a fixed quantity of gold or is kept at the value of a fixed quantity of gold. This linked nearly all countries in a network, of not only fixed currencies but also exchange rates (Britannica.com). The gold standard played a key role in “transmitting the American downturn to other countries” (britannica.com).

During the great depression, it was harder for those with lower income to make any profit. Whereas the wealthy made large profits. It is known that Americans were spending more money than what they actually earned; this could have put them in even more debt. According to Sahistory.org, famers were faced with low prices and heavy debt, making it hard for them to earn money while the great depression was still occurring.

Black Tuesday, the occurred October 24, 1929, it is a then-record number of shares were traded on the New York stock exchange by panicked investors, making the onset of the stock market crash that precipitated the great depression (Sahistory.com).

So what caused the stock market to crash? Once the war ended people, felt free, free to do as they pleased. Americans were spending more, and banks were lending more money. Eventually there was no more money to be loaned out, this led to banks recalling loans, and however, the people who received a loan did not have money to pay it back; this led to them selling businesses and stocks. It is because of the stock market crash the great depression occurred, however stocks were owned by a small amount of Americans.

In December of 1932, more than 2,000 people march to the Capitol Hill in Washington and chanted “feed the hungry, tax the rich”. This makes it clear that low-income families did not have it easy. The government looked out for the wealthy, but over looked those in need. When the great depression began, crime increased. It is because of trade policies the depression grew worse. When 1933 came along the unemployment rate was significantly high; sahistory.com stated 12,830,000 people were out of work. Our wages had fell by almost 50% during the depression.

The labor and businesses in our country were in deep trouble. People left for California, which at the time was considered “the new land of milk and honey” it was said that all you had to do was reach out and pick food from trees (owlcation.com), however this was inaccurate. Between the years of the great depression and event called the dust bowl occur. It destroyed a large part of the United States agricultural production, this is also one of the reasons the depression grew worse.

The “new deal”- this was the economic measure introduced by President Franklin D. Roosevelt to counteract the effects of the great depression; it involved a massive public works program, completed by the large-scale granting of loans, and succeeded in reducing unemployment between 7 and 10 million. This signified a new relationship between Americans and their government (sahistory.com). The new deal gave the people relief; however, it did not end the great depression it did bring jobs and help the unemployment rate drop but not enough to end the depression.

When did it all end? Some believe World War II was the reason for it ending. However, some historians believe it was the end of World War II that put the economy back on its feet (referene.com). It is because of the change in the unemployment rate that occurred around the same time as the start of World War II that people believe this is the reason for it ending. Although this is just a coincidence, “millions of young men were sent to fight in the war” (reference.com). It is also stated in reference.com that once the United States entered the war massive government spending help to end the depression. When the U.S. government began spending the help to mask the effects of the great depression (reference.com).

The great depression sent America and other countries into complete downturn. For years thousands of people were unemployed, (mostly those with low-income), the wealthy were “tax free”. Majority of the families’ in America income had decreased making it difficult make “ends meet” during the depression. Hundreds of families’ lost their homes, and forced to live in what they called “Hooverville’s” (factretriever.com). One Hooverville was located near Portland, Oregon.

Hooverville- was a shantytown built during the great depression by the homeless in the United States; they were named after the current president of that time Herbert Hoover (factretriever.com). It is a known fact that Americans during the great depression blamed Herbert Hoover for the depression. It is because of the “New Deal” and World War II that the great depression ended, and America was restored.

Cite this paper

The Worst Economic Downturn in the History. (2020, Sep 14). Retrieved from https://samploon.com/the-worst-economic-downturn-in-the-history/

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