The Great Depression

The Great Depression was a period of severe economic hardships which began in the late 1920s all the way to the 1930s. It is considered to be the longest and most severe economic turmoil in todays history. The effects were felt globally marked by massive loss of income as well as deflation of most major currencies. ( Bernanke 2000).They are different factors that led to depression but it is mostly linked to the First World War which had left the world in a global financial crisis.

 The U.S. stock market in the 1920s, was undergoing a prolific expansion and as stock prices rose investing in the stock market became a way of making easy money. Masses of people rushed to dispose any income they had to buy stock, some even selling their houses and properties in order to invest in the stock market ( Berton 2001).However, by 1929 prices of shares began to decline and as a result millions of people started to panic and rushed to liquidate their holdings thus worsening the decline. Phycological effects were also some of the major effects of the depression as many people committed suicide as they could not come to terms with the effects of the stock marked crush.

The gold standard was also one of the major causes that led to the depression. It was used as the basis for national currencies and their exchange rates. It had temporally been suspended to curb the effects of World war 1. The United States, European nations, and Japan had however tried to establish it (Berton 2001).  The continuous use of the gold standard by these countries only made the problem worse.

Decreased international lending and tariffs is also considered to be among the major causes of the depression.  In the late 1920s, Countries that relied on U.S. banks for loans began to seek other alternative partly because of high U.S. interest rates. The drop-off resulting from this also led to more economic hardships. American agricultural interests were also greatly affected as a result of overproduction and increased competition from European and other agricultural producers.

President Hoover was unprepared for the scope of the depression crisis and his limited response did little to help the millions of Americans in need. He took several steps to keep up with his philosophy of limited government, an ideology that many had shared with him until the upheavals of the Great Depression ( Bernanke 2000).The effects were so severe making it clear that a more direct government response was required.

President Hoover called for a spirit of volunteerism among America’s businesses, asking them to keep workers employed and encouraged the citizens to make due with the little they had.  He also tried to create programs aimed at putting people back to work and helping fund local and state charities with aid. The programs, however were small in scale and highly specific as to who could benefit thus only touching a small percentage of those in need. As the situation worsened, the public grew frustrated with President Hoover and he left the office with one of the lowest approval ratings of any U.S president in history.

 

 

 

 

 

 

 

 

References

Bernanke, B. (2000). Essays on the Great Depression. Princeton, N.J: Princeton University           Press.

Berton, P. (2001). The Great Depression 1929-1939. Toronto: Anchor Canada.