Cause and Effect Essay of the Great DeppressionEssay Preview: Cause and Effect Essay of the Great DeppressionReport this essay. Some of the causes of the Great Depression were low-interest rates, overproduction, uneven distribution of wealth, High Tariffs, falling demand, stock market speculation. Because of these things, one effect it had on was the economy the economy shrank 50%. In the first 5 years ago depression just in 1929 the economic output was $105 but by 1933 the country had five years of losses and only produced 57 billion dollars. Another effect it had was on politics that oppression affects politics by badly shaken confidence in unfettered capitalism. Another one is social life this the Dust Bowl drought destroyed farming in the Midwest and it lasted 10 years too long for most Farmers even hold out. To make things worse prices for agricultural products dropped to their lowest level since the Civil War. Almost 6,000 shantytowns called Hooverville Spring up in the 1930s. Wages for those who still had jobs fell 42%. Average family income dropped 40% from $2,300 in 1929 to $1,500 in 1933 thats like having income fall from $32,000 to $20,000 and twenty $16 as a result of increased by 50%. Roughly 250,000. And also hiring a fact on employment at the beginning of the Great Depression, in the last year of the Roaring Twenties, I dont plummet with 3.2%. Thats less than the natural rate of unemployment. By 1930 had more than doubled to 8.7%. Thats skyrocketed to 15.9% in 1931 and 23.6% in 1932. My 1933, unemployment was 24.9%. Almost 15 million people are out of work. That was the highest unemployment during the Depression and since then.
Another area these things affected was banking during the Depression, half of the nations banks failed. And the first 10 months of 1930 alone, 744 fail. That was 1000 percent more than the annual rate in the 1920s. My 1933, 4,000 Banks had failed. As a result, depositors lost 140 billion dollars. Next was the stock market the stock market lost 90% of its value between 1929 and 1932. They didnt recover for 25 years. Thats because people lost all confidence and Wall Street Market. Businesses, Banks and individual investors were wiped out. Even people who had invested lost money, because the banks invested money from their savings accounts. Trade was another area the World Trade plummeted 65% as measured in dollars and 25% and the total number of units. By 1939, it was still in below its level in 1929. In 1929 there were 5.3 billion dollars and trade value 1930 4.9 billion dollars
The 1930s and 1940s
A few of these things have been mentioned here. First, stocks which had hit a low in 1929, are now much higher when they hit the high end of 1929.
The 1933 stock market index began after the Great Depression, and grew steadily through the 1930s. By 1940, it began to fall and had been for another 13 years. The stock price peaked in 1942 as the year that the Second World War ended.
By 1948 it was dropping down to around -12.5 dollars per share and falling down to 12,800. That was during the time of the First World War but during the war it fell to near 5 dollars a share. By 1950 it was dropping down to -1.5. By early 1946 it had been lower for 4,000 years since the Second World War and it has not experienced a falling index since. (source)
The first of the things people were concerned about during the 1930s was the war. According to a World Bank report for 1929, this event “caused the stock market to fall by 10 million dollars to -12 percent in the late 1940s.”
“However, the actual amount of stock market losses continued through the 1990s, and so stocks recovered well over 60 percent of their value during the 1990s. During that period, the average loss was nearly $0.28 per share, and only about 50 percent of the total trade value of stocks disappeared.”
Second, since the world’s governments did not act the following order of magnitude to help the country recover, a drop of up to about three million dollars a year is possible. The USGS used this estimate by referring to the time period in December of 1942 through December of 1945 to estimate the lost value for the USGS system. The most recent number that you can make here is about 23 million dollars a year, which is under the correct assumption that the world’s government acted as it has always done. From the United Nations, the “United Nations Secretariat and other bodies” reported that in 1948 the USGS had estimated “an estimate of 33 million dollars lost annually in the US since the Great Depression to the US government.” This cost the government about 15 percent of the estimated lost value for the USGS. The money that the government lost was actually spent to buy weapons and equipment.
Fourth, the economy never recovered from the Great Depression. The US government reported a $40 billion deficit in the US. What happened to the economy was not covered in the most accurate estimates from the world banks. I’ve just listed the information taken in the latest report from the IMF.
The Third Great Depression
This was clearly the period in between the beginning of 1929 and the peak of the Great Depression. The government ended up buying the stocks that were trading under the name of the New York Stock Exchange.
The price increase did not occur during this period. Although the stock market didn’t see any sharp decline in early 1938, the United States lost more than 70 million dollars from 1929 to 1940, which was almost 40 times what was lost in the Second World War. The collapse coincided with the Great New Deal and the New Deal’s first major economic change.
Inflation, which increased at the height of the New Deal, led to this decline from 1938 through 1940, resulting in this loss again in 1938. Between the end of September and late December, the United