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Great Depression Essay

This sample Great Depression Essay is published for informational purposes only. Free essays and research papers, are not written by our writers, they are contributed by users, so we are not responsible for the content of this free sample paper. If you want to buy a high quality essay at affordable price please use our custom essay writing service.

The Great Depression began in October 1929 when the stock market crashed, causing economic chaos and forcing many businesses and banks to go bankrupt. The Great Depression increased America’s awareness of the poor as more Americans lived in poverty, ceasing to take affluence for granted. In its most basic sense, the Great Depression arose from economic circumstances: during the Depression, the total national income fell from $90 million to $40 million; from 1929 to 1933 consumption levels declined 18 percent and investment levels declined by 98 percent. The American state of mind during the Great Depression also had an impact on the economy as businesspeople lost faith in the economy and refused to invest, which caused the Gross National Product (GNP) to decline. Although the economic effect of the Depression had ended by late 1941, when America entered World War II, some of the cultural, social, and political effects faded more slowly; some remain even today.

The causes of the Great Depression were more complicated than a simple stock market crash. Some long-term causes of the Great Depression were evident in the 1920s, notably overproduction of agricultural produce and commercial products, which led to low prices for farm produce, and a relative lack of demand for products in the 1930s that negatively impacted the economy. In the 1930s workers’ wages lagged, plummeting many middle- to lower-class persons below the poverty line. This process began before the stock market crash: at the end of the 1920s, 60 percent of

Americans lived below the poverty line, and the top 1 percent owned 20 percent of the nation’s wealth. The agricultural downturn of the 1920s also foreshadowed the Great Depression: production during World War I led to agricultural growth in the 1910s, but continued high-level production after the war flooded the market, driving profits down. This result was a crisis in American agriculture, and small-scale farms (sharecroppers, family farms) were affected the most. Large farms were able to outlast the downturn because of New Deal programs such as the 1933 Agricultural Adjustment Act (AAA), which limited production in an attempt to raise produce prices. Ironically, the AAA only helped large farmers and drove most remaining small (or dependent) farmers from their land. Such examples show that the nation was totally unprepared for the onset of the Great Depression, despite various warnings in the 1920s. The stock market crash affected all aspects of American life: society, politics, economy, and psychology.

The Official Response: Conflicting Ideologies

 Herbert Hoover, a self-made Progressive Republican from Iowa, was president in 1929 when the stock market crashed. Although he was a capable leader and a successful businessman, Hoover did not know how to react, except to reassure business leaders and the public that the economy would soon recover. Ironically, the very traits that made Hoover a success— faith in individualism and optimism in the American capitalist system—led to his political downfall. Faced with America’s largest economic crisis in recent memory, Hoover chose not to involve the federal government directly, hoping that the economy would correct itself. As the Depression continued and more and more people lost work, many Americans began to resent Hoover’s inaction and policy of catering to large business. Impoverished Americans blamed the President for the high unemployment levels and bitterly referred to the makeshift shantytowns that developed across the nation as “Hoovervilles.” The low point of Hoover’s popularity was the so-called Bonus Army of World War I veterans, who gathered in Washington in 1932 to demand early payment of promised service benefits. After a riot broke out in late July, Hoover called for federal troops, led by General Douglas MacArthur, to disperse the Bonus Army. Hoover was not entirely unsympathetic, however, and he established a few programs in 1932 to aid the economy, such as the Reconstruction Finance Corporation (RFC), which was designed to prevent banks and insurance companies from bankruptcy. But his overall policy was to wait out the Depression rather than to engage the federal government in welfare-relief programs or superfluous spending.

The policies of Franklin D. Roosevelt, who decisively defeated Hoover in the 1932 election, were nearly opposite his predecessor’s. Roosevelt’s New Deal emphasized action over planning, and, although its economic results were mixed, the nation’s morale improved after 1933. The New Deal began the American welfare state, but it retained many conservative elements: the New Deal used federal money to aid the unemployed and to restore economic prosperity, but Roosevelt never turned to the strategies of the political Far Left, such as the federalization of industry. Some historians think that the New Deal saved the American capitalist system. During the 1932 campaign, Roosevelt emphasized his willingness to act quickly, and his engaging personality and optimistic outlook helped him convince people that, under his guidance, America could overcome the Depression. Roosevelt’s optimism was one of the most successful aspects of the New Deal: his public

persona helped lessen the psychological effects of the Depression. After 1933, bankers lost some of their initial reluctance, and the economy improved slightly from 1933 to 1937, when a short-lived recession occurred. The election of 1936 was Roosevelt’s high point, and the recession of 1937, along with disagreements with the Supreme Court, lessened congressional support for New Deal programs, which were less necessary in the late 1930s from an economic standpoint—the initial shock had faded somewhat.

Roosevelt’s New Deal significantly changed the way that the federal government understood its role in controlling social and economic order. In general, the New Deal replaced the individualistic approach of the Progressives—like Herbert Hoover, who favored private business over federal control—with a more liberal and active federal government. Under the New Deal, federal agencies set up and oversaw relief and work programs such as the Civilian Conservation Corps (CCC) and the Works Progress Administration (WPA). Some historians have emphasized Roosevelt’s left-leaning political orientation, but Roosevelt was primarily concerned with action, not ideology, and the New Deal did not mark a political shift to the Left but was rather the result of the economic, social, and political crisis that followed in the wake of the Great Depression.

Roosevelt’s New Deal policies, though optimistic, were often poorly planned and inefficient. There were two main stages of the New Deal: in general, the first stage was more idealistic and depended primarily on Roosevelt’s charisma for support; the second stage marked a switch away from blind action toward more moderate policies, such the 1935 Social Security Act, that addressed specific problems. The “Hundred Days,” the first months of Roosevelt’s first term, was an extraordinarily active period, in which Congress approved many New Deal programs despite the lack of a comprehensive plan. After the initial fervor wore off, in the still-active period from 1935 to 1936, Roosevelt considered more pragmatic solutions—such as Keynesian economics. The basic ideology of Keynesian economics, named after English economist John Maynard Keynes, states that the way a government can correct economic recession is to increase spending, which will jump-start investments and the buying power of consumers, which, in turn, will improve the economy. Keynesian economics thus supports deficit spending rather than balancing the budget or increasing taxes; Keynes argued that, once the government invests sufficient capital, the economy will correct itself. Roosevelt corresponded with Keynes but never officially adopted his strategy. However, the return to wartime production in the late 1930s mirrored Keynes’s approach.

Changing Perceptions of Poverty

 The Great Depression had a great impact on the way that Americans viewed themselves and their social role: the economic downturn bred psychological depression. Faced with plummeting prices for produce, small farmers—many of who were already poor before 1929—desperately sought to retain their livelihood: many withheld goods from the market, plowed under fields of crops, and slaughtered livestock in an attempt to increase demand and thus prices for agricultural goods. At the same time, many impoverished and unemployed urban dwellers went hungry—there was little cooperation between distinct areas. These conditions contributed to the development of survival attitudes: many Americans began hoarding goods, and many people relocated to other areas, such as California, hoping to obtain jobs.

The Great Depression and the New Deal affected minorities but did not lead to long-term improvement in their lives: the New Deal gave marginalized groups such as African Americans hope; because of the New Deal, many blacks began to believe that they had the power to alter their situation. Federally supported new Deal programs, such as the Civilian Conservation Corps (CCC) and the National Youth Administration (NYA), did not discriminate by race and thus benefited black and minority youths equally. Blacks compromised 11 percent of the CCC and 10 percent of the NYA. Like the NYA, most New Deal programs gave blacks the same wages as whites and provided unskilled workers with job training. During the 1930s the mortality rate of African Americans declined because of an increase in their average standard of living and increased education opportunities. New Deal politicians, such as New York Senator Robert Wagner, also supported workers’ rights—which benefited many minorities. In 1937 Congress passed the United States Housing Act (USHA), which set up large-scale public housing complexes—such as the Red Hook and Queensbrough housing developments in Brooklyn—as sanitary and low-cost alternatives to tenement housing. Unfortunately, public housing failed to solve many problems of the urban poor, and the USHA plan for urban rejuvenation did not provide a long-term solution.

One of the most publicized aspects of the Great Depression was the plight of “Okies”—impoverished farmers and migrant workers who, because of drought and the extremely low produce prices, traveled to California searching for work. Novelist John Steinbeck portrayed the harsh life of Okies in his novel, The Grapes of Wrath, which followed the travels and trials of the Joad family. Steinbeck’s portrayal, though somewhat sympathetic, illustrated the pessimistic outlook that the Great Depression spread throughout the country. The Joads reach California, but their hardships continue there, and Steinbeck gives little impression that their situation will ever significantly change. A work of fiction, The Grapes of Wrath nevertheless provides insight into the psychological and material impact of the Great Depression.

The collective impact of this pessimism—combined with bankers’ financial struggles and reluctance to invest—was a general loss of faith in the American economic system. Brought up in the optimistic pre-Depression culture that stressed self-reliance and individualism as the means to obtain the “American Dream,” unemployed men lost their self-respect because of their inability to provide for self and family; the Depression fomented significant ideological and social changes. The middle-class conception of society—the belief that hard work and determination ensured that one could overcome poverty—was one of the casualties of the 1930s; the economic depression had an especially hard impact on the middle class, which was ill equipped to deal with destitution after the opulence of the consumer-oriented 1920s. During the Great Depression, the middle class understood irst-hand what it was like to be poor; thus public-relief programs enjoyed widespread support. In the long-term, however, the Great Depression had little lasting effect on the perception of the poor by affluent Americans. With the return of prosperity and the emphasis on national unity during World War II, many Americans fell back on the traditional perception that poverty is the consequence of personal inferiority or lack of effort.

References:

  1. Conkin, Paul, The New Deal, 2nd ed. (Arlington Heights, Illinois: Harlan Davidson, 1975);
  2. Divine, Robert A., T. H. Breen, et al., The American Story, 2nd ed. (New York: Penguin Books, 2005);
  3. Link, Arthur S., and William B. Catton, American Epoch: A History of the United States Since 1900, Volume II: 1921-1945, 4th ed. (New York: Alfred E. Knopf, 1973);
  4. McElvaine, Robert S., The Great Depression: America, 1929-1941 (New York: Three Rivers Press, 1993);
  5. Patterson, James T., America’s Struggle against Poverty in the Twentieth Century (Cambridge, MA: Harvard University Press, 2000);
  6. Sitkoff, Harvard, New Deal for Blacks: The Emergence of Civil Rights as a National Issue (Oxford: University Press, 1981);
  7. Steinbeck, John, The Grapes of Wrath (New York: Viking Press, 1939).

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Great Depression Essay

This sample Great Depression Essay is published for informational purposes only. Free essays and research papers, are not written by our writers, they are contributed by users, so we are not responsible for the content of this free sample paper. If you want to buy a high quality essay at affordable price please use our custom essay writing services.

The most dramatic economic shock the world has ever known began on October 24, 1929, “Black Thursday.” After years of large-scale speculations, with millions of investors borrowing money to chase the dream of easy riches and hundreds of banks willing to accept stocks as collateral, stock prices eventually far exceeded the companies’ actual productivity, and the bubble burst. The collapse of the New York stock exchange continued through October 29 (“Black Tuesday”), and during the following days and weeks countless investors found themselves broke, while hundreds of banks were forced to default on their loans.

By the early 1940s Dow Jones stock prices were still approximately 75 percent below the 1929 peak, a level that was only reached again in 1955. The Federal Reserve refused to provide emergency lending to help key banks to at least partially recover from their losses, so that the number of banks in operation almost halved over the next four years, driving thousands of business owners to the wall as their banks called in loans to stay afloat. Furthermore, because the banking system could no longer supply the necessary liquidity, new business enterprises could not be undertaken, and millions of workers lost their jobs with little hope of regaining them in the near future.

Great Depression EssayIn 1933 and 1934 one-half of the total U.S. workforce was jobless or underemployed. To make things worse, home mortgages and loans had produced a huge amount of consumer debt, and although incomes decreased, debts did not. Predictably, consumer spending declined dramatically: Between 1929 and 1933 expenses for food and housing went down by more than 40 percent, with crop prices following the same downward path.

The crisis in the financial markets had set off a domino reaction, but U.S. president Herbert Hoover was a steadfast advocate of laissez-faire principles and believed that the “invisible hand” of the market and the moral fiber of the American people would ensure that everything would eventually work out. In keeping with the contemporary tendency to manage economic problems by trade measures, Hoover adopted austerity policies, and on June 17, 1930, he signed the Hawley-Smoot Tariff Act, which doubled import duties on selected goods, causing other Western countries, already burdened by war debts and reparations dating back to the Versailles Treaty of 1919, to react by raising their own import tariffs. This provoked a major disruption of world trade.

World Economic Disaster

Internationally, a combination of high external debt, falling export prices, government fiscal difficulties, and internal banking crises spelled disaster for the world economy. Latin American countries, the most dependent on selling raw materials to U.S. industries, were the first to default on their debts. Bolivia defaulted in January 1931, Peru in March of the same year, Chile in July, and Brazil and Colombia in October. Europe was hit in 1931, when several banking crises translated into foreign exchange and fiscal crises. Hungary, Yugoslavia, and Greece were forced to default in 1932, followed by Austria and Germany in 1933.

Austria’s largest bank, Vienna’s Kreditanstalt, failed in May 1931, an event that sent shockwaves across Europe. Depositors rushed to withdraw their money from banks that were perceived to be in weak financial conditions and, in so doing, they compromised the stability of the entire banking systems of several countries. By mid-June, many German banks had collapsed. The three largest Italian banks were rescued by the Fascist regime.

One of the main consequences of this chain reaction was that trust in sovereign loans was shattered. The social and political repercussions were catastrophic. Industrial unemployment in the United States averaged 37.6 percent in 1933, while Germany reached its highest rate at 43.8 percent, the United Kingdom at 22.1, Sweden at 23.7, Denmark at 28.8, and Belgium at 20.4 percent. In western Canada more than one-fifth of the labor force remained unemployed throughout the 1930s. Meanwhile, in the United States, the penal system became increasingly punitive. More executions were carried out than in any other decade in U.S. history, and there was also a sharp rise in imprisonment. Crime rates did not significantly rise, but the mass media popularized the idea that the social order was on the verge of collapse, generating a “crime wave” frenzy among the public.

Slump Stabilized

By the early 1930s, the economic slump had destabilized the international political order, the erosion of liberal values was at an advanced stage, and welfarist costbenefit analysis had gained appeal and credibility. Prompted by the need to cut down on public spending and by the moral panic generated by the Great Depression, several governments of the most advanced democratic countries lost confidence in the effectiveness of social reforms and undertook programs for the involuntary sterilization of thousands of citizens. It was argued that under exceptional circumstances, basic rights could be withheld and that in order to reduce the burden on the public purse, social services should only be granted to those whose social usefulness and biological capability were past doubt. In the Weimar Republic, the country hardest hit by the depression, this ideological shift produced a radicalization of medical views on racial hygiene and “euthanasia.”

Trade protectionism, nationalism, and the growing appeal of fascism were among the most tragic results of the depression. Earlier enthusiasm for internationalism, cosmopolitan law, and international institutions completely disappeared, replaced by the feeling that large-scale conflicts between powers were once again inevitable.

In the Far East during the 1920s, hundreds of villages in the Chinese hinterland had seen their consumption patterns change dramatically as a consequence of the marketing campaigns of transnational corporations, which employed hundreds of thousands of Chinese peasants. However, the progressive internationalization and connectedness of the Chinese economy meant that it became increasingly vulnerable to trade fluctuations. When the depression took place, the entire structure of Chinese agricultural production was hit with unprecedented force: The process of pauperization of the countryside population seemed unstoppable. Two major consequences ensued, the strengthening of the Communist Party and a major diaspora of Chinese emigrants seeking a better future abroad.

In Japan, a country that was heavily dependent on foreign trade, unemployment soared, and labor disputes became more and more frequent and violent, as did anti-Japanese insurgent movements in Korea and Taiwan. Rural debt forced poor tenant farmers to sell their daughters as prostitutes, and thousands of small businesses were gradually absorbed by the zaibatsu, huge financial combines that pushed for more authoritarian and imperialistic policies.

In the United States, Hoover’s seeming idleness was interpreted by millions of U.S. voters as callousness, and the presidential candidate for the Democrats, Franklin D. Roosevelt, who evoked a more interventionist and caring state, won a landslide victory in 1932. His presidency will be forever identified with the New Deal, a series of Keynesian relief, recovery, and reform measures. This program revitalized the economy by reinvigorating mass consumption through deficit spending and restored psychological confidence and people’s trust in U.S. institutions and in the future by effectively reshaping their expectations. Ultimately, the U.S. economy was reinvigorated by these measures but also by the industrial demands brought about by the coming of World War II.

Deficit spending for government-funded public works programs was successfully used to aid economic recovery in Social Democratic Sweden but also in Nazi Germany, Fascist Italy, and imperialist Japan. These countries were among the first to overcome the crisis. On the other hand, in Britain and France, two countries whose currencies were pegged to the gold standard, mostly for reasons of national pride, a genuine recovery only began when large-scale rearmament was undertaken as a reaction to the National Socialist threat. It is noteworthy that those countries that remained on the gold standard fared far worse than those that did not.

In the final analysis, the depression lasted for about a decade and was aggravated by a steadfast and selfdefeating loyalty to the gold standard, as well as by increased wealth inequality and financial speculation. It was brought to an end not by the concerted effort of fair-minded and judicious leaders committed to the cause of world prosperity and peace, but by a vast military buildup leading straight into World War II.

Bibliography:

  1. Basingstoke, Patricia C. The Great Depression in Europe: 1929–1939. New York: MacMillan, 2000;
  2. Bernanke, Ben S. Essays on the Great Depression. Princeton, NJ: Princeton University Press, 2000;
  3. Garside, William R., ed. Capitalism in Crisis: International Responses to the Great Depression. London: Pinter, 1993;
  4. James, Harold. The End of Globalization. Lessons from the Great Depression. Cambridge, MA: Harvard University Press, 2001;
  5. Parker, Randall E. Reflections on the Great Depression. Cheltenham, UK: Edward Elgar, 2002;
  6. Rothermund, Dietmar. The Global Impact of the Great Depression: 1929–1939. London: Routledge, 1996.

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Free essays are not written to satisfy your specific instructions. You can use our professional writing services to order a custom essay, research paper, or term paper and get your high quality paper at affordable price. UniversalEssays is the best choice for those who seek help in essay writing or research paper writing in any field of study.