The Great Depression

The

Great

Depression

The Great Depression was an economic slump in North America, Europe, and other industrialized areas of the world that began in 1929 and lasted until about 1939. There were a few main areas of focus during the Great Depression. The key areas were the Crash of the Stock Market, Unemployment Rate, the effect on the rest of the world, World War II and our political out look and the way different countries handle themselves today. The Great Depression was the longest and most severe depression ever experienced by the industrialized Western world.

Though the U.S. economy had gone into depression six months earlier, the Great Depression may be said to have begun with a catastrophic collapse of stock-market prices on the New York Stock Exchange in October 1929, when President Hoover came in office. During the next three years stock prices in the United States continued to fall, until by late 1932 they had dropped to only about 20 percent of their value in 1929 (www.english.uiuc.edu). Some of the stock figures I received from (www.huppi.com) indicate the changes of the Gross National Product from 1930 until 1939. The Gross National Product, or GNP, for 1930 had a negative change of 9.4 percent. In 1931, the GNP continued to decline another 8.5 percent. In 1932 it dropped another 13.4 percent and continued to drop 2.1 percent in 1933. In 1934 the GNP made a turn for the better and started to increase by 7.7 percent and continued to rise in 1935 with an increase of 8.1 percent. During 1936 and 1937 the GNP rose for a combined amount of 19.1 percent but do to the beginning of recession in 1938 it had a drop of 4.5 percent. Once Recession ended the GNP went up 7.9 percent in 1939.

(Www.english.uiuc.edu) tells us that besides ruining many thousands of individual investors, this precipitous decline in the value of assets greatly strained banks and other financial institutions, particularly those holding stocks in their portfolios. Many banks were consequently forced into insolvency; by 1933, 11,000 of the United States' 25,000 banks had failed. The failure of so many banks, combined with a general and nationwide loss of confidence in the economy, led to much-reduced levels of spending and demand and hence of production, thus aggravating the downward spiral.

"The result was drastically falling output and drastically rising unemployment; by 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers, or 25-30 percent of the work force" (www.enlish.uiuc.edu). Between the years of 1930 and 1939 the Unemployment Rate of the United States was the highest it has ever been in history according (www.huppi.com). In 1930 the Unemployment Rate, or Unemp, was at 8.7 percent. In 1931 the Unemp went up to 15.9 percent or a 7.2 percent increase. In the next year the Unemp went up another 7.7 percent to 23.6 percent. 1933 was the year that the Unemp went to the highest it was in during the Great Depression, a whooping 24.9 percent. 1934 was the year that the Unemp started to show a steady decline and dropped to 21.7 percent. The next year it continued to drop and went to 20.1 percent. In 1936 and 1937 the Unemp continued to drop to 16.9 percent and 14.3 percent showing a great turn around for our economy but as soon as Recession started the rate went up in 1938 to 19.0 percent. With Recession ending the Unemp went back down to 17.2 percent turning the country back in the right direction.

(Www.english.uiuc.edu) states that The Great Depression began in the United States but quickly turned into a worldwide economic slump owing to the special and intimate relationships that had been forged between the United States and European economies after World War I. The United States had emerged from the war as the major creditor and financier of postwar Europe, whose national economies had been greatly weakened by the war itself, by war debts, and, in the case of Germany and other defeated nations, by the need to pay war reparations. So once the American economy slumped and the flow of American investment credits to Europe dried up, prosperity tended to collapse there as well. The Depression hit hardest those nations that were most deeply indebted to the United States, i.e., Germany and Great Britain. "Great Britain remained in a kind of chronic slump, which was the result of her loss of overseas markets and which was intensified by her refusal to devalue the pound in the 1920s."(http://mars.acnet.wnec.edu) In Germany, unemployment rose sharply beginning in late 1929 and by early 1932 it had reached 6 million workers, or 25 percent of the work force. According to (http://mars.acnet.wnec.edu) Germany had experienced the strange agony of the massive inflation, climaxing in 1923, because of the continuing struggle with France over war reparations. Britain was less severely affected, but its industrial and export sectors remained seriously depressed until World War II. Many other countries had been affected by the slump by 1931. Almost all nations sought to protect their domestic production by imposing tariffs, raising existing ones, and setting quotas on foreign imports. The effect of these restrictive measures was to greatly reduce the volume of international trade: by 1932 the total value of world trade had fallen by more than half as country after country took measures against the importation of foreign goods. (www.english.uiuc.edu)

"The Great Depression had important consequences in the political sphere. In countries such as Germany and Japan, reaction to the Depression brought about the rise to power of militarist governments who adopted the regressive foreign policies that led to the Second World War. In the United States, economic distress led to the election of the Democrat Franklin D. Roosevelt to the presidency in late 1932. Roosevelt introduced a number of major changes in the structure of the American economy, using increased government regulation and massive public-works projects to promote a recovery. But despite this active intervention, mass unemployment and economic stagnation continued, though on a somewhat reduced scale, with about 15 percent of the work force still unemployed in 1939 at the outbreak of World War II. After that, unemployment dropped rapidly as American factories were flooded with orders from overseas for armaments and munitions. The depression ended completely soon after the United States' entry into World War II in 1941. In Europe, the Great Depression strengthened extremist forces and lowered the prestige of liberal democracy. In Germany, economic distress directly contributed to Adolph Hitler's rise to power in 1933. The Nazis'