Great Depression Research Report: Analysis of Roots And Results
World War one, the war to end all wars, was a devastating event followed quickly by economic growth and prosperity. This period was known as the roaring 20’s, it involved the immense buying and selling of american products to consumers across the world. However, this was only the calm before the storm, for what now seemed like a utopia in many places, was about to crumble into what is now known as The Great Depression. The Great Depression was a period that brought poverty, hunger, and illness to the world. It was a time that tested people’s ability to endure the hardships of little money and resources. The Great Depression lasted from 1929-1933, but its effects lasted much longer. With the downfall of the economy around the world such as the U.S., Canda, and Brazil countries saw increases in unemployment, decreases in trade, and loss in the value of money. In order to combat these immense flops, countries had to increase money circulation, contain inflation, and focus on infrastructure. And so the seeds for WWII had been planted
In 1929 the U.S. economy underwent a disastrous transition due to the buying of stock on margin. This led to the U.S. experiencing the Stock Market crash of 1929 dropping stock prices by 23%. Another Cause to the Great Depression was the ever growing gap between Rich and poor classes. The Rich would generally preserve their money rather than investing it into companies that can provide jobs for the poor or middle class citizens. This action ultimately prevented money from flowing through the economy and thus ended up raising the price on products that needed to be sold. Lastly, since the world had just transitioned out of WWI our country was in search of ways to pay off debt accumulated from the war. This was when production and selling was at its peak, because the war created a great deal of jobs for people, people then ajobs people then had money to spend, and there was plenty to buy. However, over time this demand for supplies dwindled to the point where it wasn’t being bought. All of these causes created disastrous effects that impeded the money growth/ circulation of the U.S. economy.
When the stock market crash of 1929 hit, the U.S. was left in turmoil. The early on effects of having all investments pulled out or sold were that the companies were now losing their money. Which means that they now cant continue to support themselves which means that they need to be selling things at higher prices if they want to earn a profit. Though because everyone was scared of losing money, no one was going to go on a shopping spree especially when prices were rising. With little money circulation going around, companies and businesses could no longer support all their employees. As a result unemployment in the U.S. increased to a whopping 24.9% by 1933. This fallout was one of the many outcomes a part of the chain reaction stemming from the stock market crash of 1929.
Despite some tremendous blowbacks in the american economy, solutions to counter such arduous times were put into effect. One major solution determined by Pres. Herbert Hoover at the time was the “Smoot-Hawley Tariff act”. It attempted to increase national income by raising tariffs on U.S. products sold in and outside the country. This would in theory make sense but when put into play, completely backfired, because the American people weren’t gonna buy things if they’re all were clenching on to their money for dear life. By the end of the Depression when F.D.R was inaugurated, one of his first acts was to declare a national bank holiday where over 9,000 banks closed or placed restrictions on how much an individual could withdraw. This permitted a 3-day cooling period in which banks could recollect themselves and decide their next move. This was one of the many new programs enacted by Roosevelt to restore confidence in the american people and economy. His plan to bring the U.S. back to the top was known as the “New Deal”, and it responded to needs for relief, reform, and recovery of the great depression. When it came to dealing with unemployment Roosevelt gave birth to the Civilian Conservation Corps or CCC. The CCC was a program devised by Roosevelt in order to aid in fighting unemployment. It used government funds to pay civilians to work on public construction projects. Essentially building up the infrastructure of the country and giving people jobs to earn money that they could spend. While in truth not the most effective way in giving relief to the american people, it helped to pump out much needed jobs.
Canada, one of two neighboring countries connected to the U.S. by its border. Thus it was no surprise when the effects of the stock market crash of 1929 echoed across into their region. However, what was a surprise was that they had it much worse in terms of its devastating effects. At the time the Prime Minister of Canada, R.B. Bennette, had tried to impose laissez-affair policy, which like the U.S. would lessen government intervention and in turn let the economy sort itself out. This was not the case and left things much worse than before. Another similar cause was the raise of export tariffs to try and bring in more money. Though due to high competition and lack of variety in Canada’s agricultural market trade was no-go. Which leads to the overproduction of such agricultural produce. With wheat being one of Canada’s biggest exports, it was highly important that it was being sold to other countries. Unfortunately there was a drought that occured around the same time, and what’s even more is that farmers had used up the soil so much that high winds made farming practically impossible. Overall no money was being spent or made to support their economy.
The effects were bad in Canada in part due to the unfortunate timing of a drought during the early 1930’s. Apart from the impact that the agricultural setting had on the economy, Canada had experienced the crash of the Toronto Stock Exchange in 1929. Bankruptcies began to erase jobs and the gross national product of Canada fell 40% by 1839. Unemployment in Canada reached 30% percent by 1933, and the Nation’s trade had plummeted by 50%.
Historians today can trace the root cause of The Great depression back to WWI and its solution up to WWII. The formidable effort put forth by many countries to combat against such trying times will always serve as reminder to world leaders today. When thinking back to what really caused the worldwide economic downfall of the early 20th century I am reminded of how one humanity’s greatest terrors is fear of the unknown. So perhaps Roosevelt put it best when he said “The only thing we have to fear is fear itself.”