The+Great+Depression+and+Its+Effects

**By Daniela,Sofia, Antor, Hannah**
The Great Depression was a period between 1929-1938 of international economic weakness. While this event stems from primarily economic stimuli, its impact covers political and social ground that still affect us today. Economic Cause, Effects, and Solutions The mains causes of the great depression are decline in consumer demand, finical panics, stingy government policies, and the notorious Gold Standard. Many associate the start of the Great Depression with the Stock Market Crash, but forget the summer of decline preceding it. In the summer of 1929, the United States’ implementation of a strict Monetary policy to reduce stock market speculation led to steady decline of stock prices, which had increased fourfold since 1921. In order to regulate these skyrocketing prices, the United States raised interest rates. This eventually backfired on them, by leading to a sharp decline of prices and depression in areas, such as construction and car production, which in turn forced investor, most of whom purchased their holding on margin to liquidate their ventures. The crash led to falls in consumer demands for goods. Buyers uncertain about their monetary future withdrew the money from their bank accounts. Bank hold only a fraction of deposits, so overwhelming demands of the population crippled the banking industry, putting 80% of banks out of business from 1930 to 1931.



The root of these irrational panics can be traced back to increases in farming debts. Farmers who took out loans in order to expand during WWI when food prices soared, were struggling to repay them in the mist dropping demand for their produces. Monetary expansion seems would be a crucial next step in economic recovery, but it was delayed by the Gold Standard, a system that contaminated the Global trade network with depression. This system, which allowed nation to set prices for their currency in gold and defend it, was widely returned to after WWI to stimulate international trade and gold flow. With the fall of US prices, a heavy demand for American commodities, and lack of demand from consumers, American trade surplus had to be matched with contraction in other nations, such as high interest rates. Like the United States, other countries, primarily European entities suffered extensive damage. Banking crisis and unemployment plagued the globe. A string of debacles at Creditanstalt, anAustrian bank sent a tsunami of fiscal panic that eventually led to Britain abandoning the Gold standard. World Trade collapsed, because as nations tried to rebuild their own industries and imposed high tariffs on imports. This collapse led many other nations into an even deeper slump. For example Canada, whose economy thrived on grain, lumber, and minerals was devastated by the lack circulation and increased unemployment by about 20%. Australia suffered extreme level of unemployment at around 30%. While countries in Europe, and North America suffered significantly, Latin America and Japan sailed mild recessions. Overall most nations concentrated on internal affairs instead of trade to rebuild themselves. Recovery from the Great the depression came slowly. Most nations started to recover in 1933, with the desertion of the Gold Standard. Monetary Expansion, WWII, and new government policy greatly facilitated the revival and led to new policy on how to handle economic difficulties. Interaction between Cultures While the time before the Great Depression was filled with cultural diffusion, countries turned away from each other during the Depression. For example, the United State loaned Germany money after World War I to help satisfy debts, but when the US went into the Depression, they recalled the loans. Many countries trying to rebuild their own economies tried to engage internal circulation but setting high tariffs on foreign imports. Despite the unfortunate conditions, America developed most of its culture during this time period. It underwent the many reforms of Franklin D Roosevelt, and considered Marxist ideas, which were originated in Europe. It also used the Soviet Union as a model for society! There was a circle of ideas between the US, England, France, Austria, and Germany in which cultural aspects such as art and literature were exchanged and developed. Many movements that characterized Europe during this period were radical communist and fascist policies. Hitler was responsible for creating new power balances between the US and European countries. Countries all over the world experienced a taste of Totalitarianism, and Fascism went through a period of popularity. Technology and information were commonly shared between the countries affected by the Depression. Newly discovered radio broadcasts were used to spread the word about Europe’s conditions towards the end of the decade.

Social and Cultural Transformations Although millions of people lost their jobs to the instable economy of 1930’s, the category of workers most affected by the Great Depression were farmers and bankers. Because of the collapsing banking system, bankers were out of the job. Producers of food and other raw materials, which were not in high demand suffered economic hardship. Nazi powers conquered the European political flied and allowed for the expansion of radical ideas. Meanwhile American novelists, such as John Steinbeck or Edmund Wilson filled libraries all over with new classics. This new period of economic downfall, never before experienced in the new world overshadowed the radical ideas that were brewing in the other corners of the globe. Nazi movements in Germany led to an influx of intellectual immigration, to England, France, and the U.S. Many people became influenced by the labor movement; they stressed the establishment of unions and rights for workers. The population became more informed its economic future and took charge. Theatre became an avid way that economic opinions were voices. Companies in New York set up plays that were not only artistically sustaining, but also socially relevant. The lavish lifestyle of the roaring 20’s was immediately transformed by simple and thrifty themes. People played monopoly and went to the library as a pastime, and wages in the Major League Baseball League were cut. With the end of prohibition, nightclubs opened again and became hot spots for socialization. Radio and Film became new mediums to entertain crowds. Cultural nationalism took on an active role in revitalizing the United States, Europe, Japan, and the Soviet Union. State building, Expansion, & Conflict The economic instability of the Great Depression crumbled the political systems globally. Latin American governments collapsed and were between 1929 and 1931. Authoritarian governments replaced democracies, and totalitarianisms systems were overthrown in favor of democracies. In Europe, the depression inspired a mixture of radical political crowds. Germany had a desperate economic status, which led to the fascist power in the 1930’s. Inside the United States, political framework was held together, by policies like ‘The New Deal’ courses, organized under President Franklin D. Roosevelt. This decade of economic unsteadiness was an earthquake to nations’ government structures. Breaking down previous institutions, rearranging the basic order of things, and creating radical foundations that paved way for the future. The Great Depression subordinated the status of liberal democracy in Europe. In Germany, the Nazi’s public projects caused the end of their depression in 1936. Before the Great Depression however, many governments in Europe took no responsibility in times of business downturns and downfalls, instead they had relied on market forces to achieve economic correction. However, these forces just weren’t efficiently enough during the early phases of the depression, and due to this, the United States reformed their economic construction. After the Great Depression, the government actions took on major roles as economic mediators.

The economic downfall led to a worldwide chain of political unrest and amends. Brazil’s coffee fees dropped drastically, causing a dire economic crisis, which became the catalyst for a revolt. In Argentina, the sparks of rebellions overturned the whole government. Unstable political called for drastic measures. Mexican President, Alvaro Obregón was assassinated in 1928, shortly before the murder of Prime Minister, Osachi Hamaguchi in Japan during 1930. Other rulers such as, Alfonso III, the king of Spain went into exile from this depression. Europe often relied on Africa and Asia as an outlet for power and wealth, but in 1920’s and 1930’s National movements endangered Europe’s control over their valuable possessions. Revolutionaries such as Kenyan autonomist leader, Harry Thuku were incarcerated. In order to suppress budding movements in India, the British banned the ‘Indian National Congress’ and imprisoned Mohandas Gandhi in 1932. In the United States, and the United Kingdom, the depression drew the Democratic and Labor parties to fuse together. However, unlike those western powers, other countries such as, Germany, Italy, and Austria initiated their power through fascists and Nazi governments that faulted minorities and financiers for their pitiful economic statuses. The Depression was an era that not only destroyed economic systems. It reformed government to take a role in as economic mediators. Radical powers rose up in places such as Austria and Japan. Governments were reconstructed, rebuilt, demolished. The effects of the economic debacle caused political chaos and stretched farther than simply stock markets.

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