Thegreat depression was a drastic financial recession experienced duringthe 1930s and the effects were felt globally. The depression thoughglobal was not evenly spread across all countries as it started atdifferent times depending on the country. The depression originatedin the United States of America in late 1929 when the prices ofstocks fell drastically. The decline in stock prices led to a rippleeffect felt across the globe and at the peak of the great depressionthe global GDP had fallen by over 15%. During the recession of the21st century that began in 2008, the global GDP only fell by 1% thisdemonstrates the severity of the great depression. In this studypaper, the author will analyze the causes and means of tackling thisgreat crisis.
Thepurpose of this study is to analyze in great detail the greatdepression and put forward learning points. This paper is significantas it will provide the reader information that is relevant instudying global economies.
Causesof the Great Depression
Mosteconomists hold the opinion that the collapse of the US stock marketwas a symptom of the depression but not the cause of it. This sectionof the study will take a critical analysis of these factors. Thereare two main theories that try to explain the origin of thisfinancial crisis these are the Keynesian theory, and the Monetaristtheory.
Thistheory was created by the British economist, John Keynes. Heexplained that when the stocks fell in the USA consumers lost faithin Wall Street and simply stopped buying stocks. A reduction in stockpurchases led to a steady slowdown in industries and other producingcompanies. This, in turn, meant that the companies had fewer profitsand had to lay off workers and reduce wages for those still inemployment. The purchasing power of the citizens fell, and mostpeople had to borrow without a sure way of repaying leading to afinancial crisis in the US. The great depression was caused by acombination of multiple factors.
Thetheory states that the financial crisis resulted from the bankingcrisis that occurred during late 1929 in the USA. The banking crisislead to the closure of almost a third of all banks at the time. Thecrisis lead to a reduction of monetary resources by 35% in thebanking sector led to a drop in commodity prices by over 30%. At thetime the Federal Reserve could not significantly increase the supplyof funds to the banking sector as it was restricted by the FederalReserve. With the reduction of available funds in the marketbusinesses could not obtain loans forcing most businesses to closedown. The closures exasperated the recession into a depression.
TheNew Deal by The Federal Reserve
TheGreat Depression had a dire effect on the American economy forcingthe Federal Reserve under the instruction of the newly electedpresident, Franklin Roosevelt. The Federal Reserve called for afour-day banking holiday for all the remaining banks. During thesedays the president alongside Congress made changes to legislation toease the depression. The Roosevelt administration also made publicbriefings sued to encourage the citizens and urge them to engage infinancial activities. Public confidence was restored by the end ofFranklin Roosevelt`s first hundred years. The American administrationlegislated an Emergency Bank Act to assist in dealing with the greatdepression. The legislation played a significant role in supervisingbankruptcy in a financial organization and also profitable businesses(Hamilton, 2014).
Endof World War 2 and The Start of Cold War
Theend of the second world war was marked by the introduction anddemonstration of new weapons that could potentially change the faceof warfare such as the nuclear and the atomic bomb. The existence ofthese weapons lead to a new arms race the global superpowers allwanted to own the weapons and have a military superiority compared toall other countries. The two major superpowers USA and Russia were onopposing sides during the war and each of the countries was producingnuclear weapons. This availability of these weapons in the hands ofopponents lead to the creation of tension in the global scene.
TheUnited States of America believed and followed a different economicstyle than Russia which was the second superpower at the time. Russiafollowed communism extending the ideology of the former communistSoviet Union The USA, however believed and implemented capitalism.The difference in ideology limited trade and trade agreements betweenthe two states. With poor trade and working relationships between thecountries lead to the exaggeration of the previously developedtension between the communists and the capitalists majorly the USAand Russia.
Impactof Cold War Tension on America
Themost evident effect of the cold war tension in the American cultureis the view that Russia is not their ally. In the contemporary wordmany American Citizens view Russia as an enemy to them. The UnitedStates also made changes to its domestic and foreign policy to ensureit can implement military action with greater ease against an enemy.
Changesbrought about by the civil rights movement
Thevarious civil rights movement in the United States rose againstdifferent social, economic and political captivity. Even though notall their quest came to fulfillment, they could acquire some changesin the cultural and economic aspect of their lives. This paperexamines the cultural and economic impacts of the civil rightsmovement by outlining the positive gains realized after their questfor their legal rights.
Therewere various changes experienced in the US economy after the civilrights movement demanding for their rights. There were increased jobopportunities for the blacks who had graduated with high grades fromthe universities. Therefore, the living standard of the blacks whohad graduated rose to a point where they could sustain themselves.Despite an increase in the income of the blacks due to employmentopportunities, the incomes of the whites remained stable while thesechanges were experienced. This transition led to the incorporation ofblack workers into the economy of the US.
Thecultural shifts were experienced during the movement of civil rightsmovement from one street to another. This change was first realizedin higher institutions of learning where black students couldpersuade the administration to create the Afro-American program andthe financial aid principle which could enable children from the lessprivileged families to acquire tertiary education. Conversely, in themilitary, the incorporation of various policies enhanced equality inthe workplaces in the nation. This led to whites being supervisedwith black people. This led to all races having the freedom torequest for fair treatment and other positive changes that wouldpromote the spirit of equality.
Additionally,after the 1960s, the blacks, and the Jews decide to work together tofight discrimination in the American society. This alliance wasformed especially after realizing that many coalitions failed toattain their objectives due to discrimination and inequality.Moreover, other coalitions such as blacks, Latinos and AsianAmericans teamed up to form substantive treatment which led to betterchanges in their living. Therefore, this coalition of different racesled to the abolishment of discriminatory employment and made publicinstitutions accessible to every individual. Additionally, it led tothe end of sterilization abuse, increased equality in child care andmaternal health.
Hamilton,J. D. (2014). Monetary factors in the Great Depression. Journal ofMonetary