The Great Depression of the 1930s began with the stock market crash of October 1929.
When the US economy first experienced an economic recession it was as a result of the great depression that started in August 1929. Even though the country spent two months with falling GDP, it was not until the Wall Street Crash in October 1929 that the impacts of a falling economy were felt, and a major global economic downturn followed. The market crash signaled the start of a decade of poverty, high unemployment during great depression, low profits, deflation, falling farm incomes, and lost opportunities for personal advancement and economic growth. Even though its causes are still controversial and uncertain, the total effect was an abrupt and general loss of trust in the economic future.
The conventional explanations include various factors, particularly ill-regulated markets, high consumer debt that allowed overoptimistic loans by investors and banks, and the absence of high-growth new companies, all contributing to create a decreasing economic coil of falling confidence, reduced spending, and reduced production.
Industries that were affected the most included agriculture, construction as dust bowl conditions continued in the shipping, agricultural heartland, logging and mining as well as durable commodities like appliances and automobiles that could be postponed. The economy arrived its base in the winter of 1932–1933; then followed by four years of quick growth until 1937, when the 1937 Recession brought back 1934 levels of unemployment during the great depression.
The great economic depression fostered key political changes in the US. Three years into the depression, President Herbert Hoover, who received general criticism for not doing enough to fight the great economic depression, lost the election of 1932 to Franklin Delano Roosevelt by a wide margin. The economic recovery plan of Roosevelt, the New Deal, established unprecedented relief programs, reform and recovery, and came with a principal realignment of US politics.
The Depression also led to an increase of emigration of individuals to other nations for the first time in history of America. For instance, some native US citizens went to Australia, Canada and South Africa and some immigrants went back to their countries of origin. It also led to the mass migration of individuals from badly affected regions of the south to places such as California and the North, respectively and areas in the Great Plains. Racial issues also augmented during this period. By the 1940s, immigration normalized, and emigration declined. The memory of the great depression also molded modern economic theories and resulted in various alterations in how the government addressed economic downturns, such as the use of Keynesian economics, stimulus packages and Social security.There are several issues originating: what components initiated the first downturn in 1929, how the downturn spread from country to country, what structural loopholes and specific events transformed it into a major depression and why the economic recovery took so long.
Banks started to fail in October 1930 (a year after the crash) when farmers failed on loans. There was no federal deposit insurance during this period as bank failures became quite common. This disturbed depositors that they might have an opportunity of losing all their savings, thus, people began to withdraw cash and transformed it into currency. As more and more deposits were taken out of the bank, the money supply fell since the money multiplier operated in reverse, pushing banks to liquidate. The money supply shrinked as a result and the economy contracted as well as a considerable decrease in aggregate investment. The dropping money supply further worsened price deflation, applying more pressure on already staggering businesses.
The US after World War 1? President Wilson announced that belligerency would need "the mobilization and organization of all material resources of the country." Indeed, the administration worked relentlessly to win both the minds and hearts of the American public behind the war endeavor. When the war started, the economy of the U.S was in recession. But a 44-month economic burst followed from 1914 to 1918, initially as Europeans began buying U.S. commodities for the war and later as the U.S itself joined the fight. Supply & Demand Initially, the citizens thought it was going to be a short war. Nevertheless, as the war progressed the demand and supply began to increase. The people then had to make changes to meet up with military demands. The Rough Riders used low tech weapons and barely had horses for the high rank officials and Generals to ride. Thus, the cavalry traveled with low tech guns and knives on foot, acquiring one or two machine guns along the way. Vehicles became more and more common during World War 1 since people had the cash to buy them. The Boosted War Economy Governments set up special agencies to channel their economies. These agencies took complete control over labor, raw materials, and transportation. The government channeled its needs to industry and then provided the necessary resources for production.
New Methods in the US after World War 1
The war did not only cause overwhelming changes in economic production, it also demanded new methods of financing that production. Because of its massive purchases of armaments, the government replaced the individual household as the principal consumer of the country’s goods and services. The boosted war economy in the US enabled people to buy more stuffs. Before WW1, many people had a difficult time surviving. Presently, American citizens had the money for more stuff and leisure activities as well. The Rough Riders utilized the standard of that time which was fire shots and whenever you can, reload! Even though with the added machine guns it was hard to take over and charge because with machine guns you could gun down a hundred men in less than 5 minutes.
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