Great Depression Paper 3 Study Questions Essay

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Great Depression Paper 3 Study Questions

1. The effect of the Great Depression on the society of any country in the Americas.

The Great Depression brought a rapid rise in the CRIME RATE as many unemployed workers resorted to petty theft to put food on the table. Suicide rates rose, as did reported cases of malnutrition. Prostitution was on the rise as desperate women sought ways to pay the bills. Health care in general was not a priority for many Americans, as visiting the doctor was reserved for only the direst of circumstances. Alcoholism increased with Americans seeking outlets for escape, compounded by the repeal of prohibition in 1933. Cigar smoking became too expensive, so many Americans switched to cheaper cigarettes. Higher education remained out of reach for most Americans as the nation’s universities saw their student bodies shrink during the first half of the decade. High school attendance increased among males, however.

Because the prospects of a young male getting a job were so incredibly dim, many decided to stay in school longer. However, public spending on education declined sharply, causing many schools to open understaffed or close due to lack of funds. Demographic trends also changed sharply. Marriages were delayed as many males waited until they could provide for a family before proposing to a prospective spouse. Divorce rates dropped steadily in the 1930s. Rates of abandonment increased as many husbands chose the “poor man’s divorce” option — they just ran away from their marriages. Birth rates fell sharply, especially during the lowest points of the Depression.

More and more Americans learned about birth control to avoid the added expenses of unexpected children. Mass migrations continued throughout the 1930s. Rural New England and upstate New York lost many citizens seeking opportunity elsewhere. TheGREAT PLAINS lost population to states such as California and Arizona. The Dust Bowl sent thousands of “OKIES” and “ARKIES” looking to make a better life. Many of the MIGRANTS were adolescents seeking opportunity away from a family that had younger mouths to feed. Over 600,000 people were caught hitching rides on trains during the Great Depression. Many times offenders went unpunished.

2. The effect of FDR’s domestic policies in the 1930’s on the power of the presidency, the power of the states & attitudes towards government regulation of the economy. 4. The success of one government of the Americas to try & solve the problems of the Great Depression. 8. Success of programs of governments of the Americas to deal with the Depression.

Franklin Delano Roosevelt entered the White House in 1932 at the darkest hour of the Great Depression, promising “a new deal for the American people.” The package of legislative reforms that came to be known as the New Deal permanently and dramatically transformed the politics and economy of the United States. Shortly after taking office, Roosevelt explained to the American people that his New Deal program would seek to deliver relief, recovery, and reform—the so-called “3 Rs.” In the field of relief, the New Deal proved to be highly successful. Millions of Americans, unable to find work in an economy that was still badly broken four years into the Great Depression, might have literally starved to death if not for the government checks they earned by working for new agencies like the Civilian Conservation Corps and Works Progress Administration.

FDR created other policies such as the AAA which paid farmers to destruct crops and reduce production to keep prices from falling, National Industry Recovery Act which established a minimum wage and maximum working hours. In terms of reform, the New Deal legacy may have been unmatched in American history. For better or worse, Roosevelt’s program drastically altered the relationship between the capitalist market, the people, and their government, creating for the first time in this country’s history an activist state committed to providing individual citizens with a measure of security against the unpredictable turns of the market. Whether this vast enlargement of the government’s role in American society helped or hurt the country’s long-run prospects remains a question of great political controversy to this day, but there can be no denying the magnitude of change wrought by FDR’s presidency.

When it came to recovery, however, the New Deal’s performance lagged. It was certainly successful in both short-term relief, and in implementing long-term structural reform. However, the New Deal failed to end the Great Depression. Throughout the decade of the 1930s,unemployment remained brutally high, while economic growth remained painfully slow. Recovery only came about, at last, in Roosevelt’s third term, when the heavy demands of mobilization for World War II finally restored the country to full employment.

Ironically, then, Adolf Hitler probably did more to end the Great Depression in America than Franklin Roosevelt did. Still, despite failing in its most important objective, the New Deal forever changed this country. Roosevelt built a dominant new political coalition, creating a Democratic majority that lasted for half a century. The structural stability and social security provided by the New Deal’s reforms underlay a postwar economic boom that many historians and economists have described as the “golden age of American capitalism.” And Roosevelt permanently changed the American people’s expectations of their presidents and their government.

3. The achievements & limitations of Mackenzie King as Prime Minister of Canada. In the initial six months following the stock market crash, King took little action to address problems like unemployment. When asked where the proceeds of raised taxes would go, King answered “I would not give them (a Tory government) a five-cent piece.” King took a ‘hands-off’ approach to the situation because he believed the economy would fix itself. He appeared unwilling to address the problems of the depression. He began a policy of freer trade. Within three weeks of taking office he had signed a trade agreement with the United States (1935). This marked the turning away from the ever-increasing tariff barriers between the two countries which had reached their peak with the Hawley-Smoot tariff and the Bennett tariff, both in 1930.

A further trade agreement was signed three years later involving Great Britain as well as the United States. Soon after taking office King appointed a National Employment Commission, which was assigned to reorganize the administration of all relief expenditures, and recommend measures which to create employment opportunities. The NEC was ineffective. Most of the relief was administered by provincial and municipal governments and, even though the federal government was providing much of the money, there was little the federal government could do to change the system. The 1938 budget included $25 million in additional expenditure after pressure from the NEC.

This was a turning point in Canadian fiscal policy—for the first time a government had consciously decided to spend money to counteract a low in the business cycle. This was the application of Keynesian economics, which saw that governments should deliberately invest into the economy during times of depression in order to counterbalance the deficiency, because private enterprise was not in the position to do so itself. In addition to the expenditures in the budget the government also offered loans to municipal. Nationalities for local improvements and passed a Housing Act to encourage the building of homes. Consistent with this Keynesian approach, the government also reduced some taxes and offered some tax exemptions for private investors.

5. The causes of the Great Depression & its effects.

Great Depression: Causes

Stock Market Crash of 1929: The stock market crash took place on Black Tuesday, October 29, 1929. It was one of the major causes that led to the Great Depression. Two months after the original crash, the stockholders had lost more than 40 billion dollars. By the end of 1930s, the stock market started to regain some of its losses. However, it was not sufficient and America was in the state of the Great Depression. This situation was worsened by firming of money rates to the commercial interests. Bank Failures: Throughout the 1930s, a huge bank failure took place and more than 9,000 banks failed. Most bank deposits were uninsured. As a result, a number of people lost their savings due to the bank failures. Because of uncertain economic situation and problems of bank survival, people were not willing to go for new loans.

Reduction in Purchasing Across the Board: With the stock market crash and fears of economic woes, people from all classes stopped purchasing any items and avoided expenditures. As a result, production of a number of items was decreased. It ultimately resulted in a reduction in the workforce. As numerous people lost their jobs, they were unable to pay for the items they had bought on installment plans. As a result, their items were repossessed. There was an accumulation of more inventories. About 25% of people were unemployed.

American Economic Policy with Europe: As the businesses begin to fail, the government created the Hawley-Smoot Tariff in the year 1930 in order to help protect the American companies. A higher tax was charged for the imports, leading to a reduced trade between the U.S. and the foreign countries. Drought Conditions: The drought that occurred in the Mississippi Valley in 1930 is also regarded as one of the major causes of the Great Depression (though not a direct cause). As a result, several people were not able to pay their taxes due to other debts. Therefore, they had to sell their farms without gaining any profit. They moved to the cities in search of jobs. Many farmers lived on charity, along with their families.

Economic Effects: As it was a major economic phenomenon it had serious and widespread economic effects. Trade Collapse. The Depression became a worldwide business downturn of the 1930s that affected almost all countries. International commerce declined quickly. There was a sharp reduction in tax revenues, profits and personal incomes. It affected both countries that exported raw materials and the industrialized countries. It led to a sharp decrease in world trade as each country tried to protect their own industries and products by raising tariffs on imports. World Trade collapsed with trade in 1939 still below the 1929 level. It set the wheels rolling towards the end of international gold standards and consequently the emergence of the fixed exchange rate system. Reduction in Government Spending.

Governments all around the world reduced their spending, which led to decreased consumer demand. Construction came to a standstill in many nations. As a consequence of government actions, the real Gross National Product of nations like United States and Britain fell by 30.5%, wholesale prices fell by 30.8%, and consumer prices fell by 24.4%. Employee Distress Wages were scaled down to 20 percent, whereas 25 percent of the workforce was left unemployed. This led to decrease in the standard of living pushing the economy further into the depth of the Depression. Breakdown of the Financial Machinery. Thousands of investors lost large sums of money and several were wiped out, losing everything. Banks, stores, and factories were closed and left millions of people jobless, penniless and homeless. In 1929, 659 public sector banks were shut and by the end of 1931 this number rose to 2294.

Many people came to depend on the government or charities to provide them with food. Effect on Agriculture. Due to lack of subsidies and loans, farmers were unable to support mass produce leading to under-capacity output. Textile farming faced the major blow. The period served as a precursor to one of the worst droughts in modern American history that struck the Great Plains in 1934. Although a few segments under agriculture – e.g. cotton – benefited from the crisis, in general the whole agricultural sector experienced a setback. Political Effects. The Depression had profound political effects. In countries such as Germany and Japan, reaction to the Depression brought about the rise to power of militarist governments who adopted the aggressive foreign policies that led to the Second World War.

In Germany, weak economic conditions led to the rise to power of Adolf Hitler. Germany suffered greatly because of the huge debt the country was burdened by following World War I. The Japanese invaded China and developed mines and industries in Manchuria. Japan thought that this economic growth would relieve the Depression. In countries such as the United States and Britain, the government intervened which ultimately resulted in the creation of welfare systems. Franklin D. Roosevelt became the United States President in 1933. He promised a “New Deal” under which the government would intervene to reduce unemployment by work-creation schemes such as painting of the post offices and street cleaning. Both agriculture and industry were supported by policies to limit output and increase prices.

6. Factors of world trade & finance that caused the Great Depression in the Americas.

In the 1920s more people invested in the stock market than ever before. Stock prices rose so fast that at the end of the decade, some people became rich overnight by buying and selling stocks. People could buy stocks on margin which was like installment buying. People could buy stocks for only a 10% down payment! The buyer would hold the stock until the price rose and then sell it for a profit. As long as the stock prices kept going up, the system worked. However, during 1928 and 1929, the prices of many stocks went up faster than the value of the companies the stocks represented. Some experts warned that the bull market would end. Buying on credit was a huge problem in the 1920s. Since the 20s was a period of great economic boom, not many people took the future into consideration. Many people bought refrigerators, cars, etc. with money that they did not have. This system was called installment buying.

With this system, people could make a monthly, weekly, or yearly payment on an item that they wanted or needed. This happened until Black Tuesday, when the stock market crashed. The two systems, installment buying and buying on credit, left millions of people in debt. When many lost their jobs, they could not pay back the debts they had incurred. Supply and demand helped bring about and also lengthen the Great Depression. The American farms and factories produced large amounts of goods and products during the prosperity before the Depression. On average people’s wages stayed the same even as prices for these goods soared. People who lived on farms had even less than urban dwellers. Because people had no money, they stopped buying these products, but factories and farms still continued to produce at the same rate.

As the farmers and industry leaders realized fewer people were buying, they cut back production. To do this, they had to lay off more and more workers. These unemployed workers didn’t have money to buy anything, so the factories continued to lay off people. This trend continued in a downward spiral until twenty-five per cent of the population was unemployed. In the summer of 1929, a few stock market investors began selling their stock. They predicted that the bull market might end soon, leaving them in debt. Seeing these few investors begin to sell, others soon followed creating a domino effect. The sudden selling caused stock prices to fall.

President Herbert Hoover tried to reassure the investors saying the country’s economy was fine and that they had no reason to worry. The words of the President were not enough, however; the selling continued. Many investors in the stock market had bought large amounts of stock on margin. Nervous brokers asked investors to pay their debts, and when they couldn’t repay they were forced to sell, causing stock prices to fall even more. On Tuesday, October 29, 1929, stock prices plummeted because there were no buyers for the stock offered by desperate sellers. Millions of dollars were lost that day due to the decrease in stock prices. Black Tuesday, as it was soon called, led directly to the Great Depression in the 1930s.

7. The relationship of business & government changed by the Great Depression in the Americas.

In the early years of American history, most political leaders were reluctant to involve the federal government too heavily in the private sector, except in the area of transportation. In general, they accepted the concept of laissez-faire, a doctrine opposing government interference in the economy except to maintain law and order. This attitude started to change during the latter part of the 19th century, when small business, farm, and labor movements began asking the government to intercede on their behalf. By the turn of the century, a middle class had developed that was leery of both the business elite and the somewhat radical political movements of farmers and laborers in the Midwest and West. Known as Progressives, these people favored government regulation of business practices to ensure competition and free enterprise.

They also fought corruption in the public sector. Congress enacted a law regulating railroads in 1887 (the Interstate Commerce Act), and one preventing large firms from controlling a single industry in 1890 (the Sherman Antitrust Act). These laws were not rigorously enforced, however, until the years between 1900 and 1920, when Republican President Theodore Roosevelt (1901-1909), Democratic President Woodrow Wilson (1913-1921), and others sympathetic to the views of the Progressives came to power. Many of today’s U.S. regulatory agencies were created during these years, including the Interstate Commerce Commission, the Food and Drug Administration, and the Federal Trade Commission. Government involvement in the economy increased most significantly during the New Deal of the 1930s.

The 1929 stock market crash had initiated the most serious economic dislocation in the nation’s history, the Great Depression (1929-1940). President Franklin D. Roosevelt (1933-1945) launched the New Deal to alleviate the emergency. Many of the most important laws and institutions that define American’s modern economy can be traced to the New Deal era. New Deal legislation extended federal authority in banking, agriculture, and public welfare. It established minimum standards for wages and hours on the job, and it served as a catalyst for the expansion of labor unions in such industries as steel, automobiles, and rubber. Programs and agencies that today seem indispensable to the operation of the country’s modern economy were created: the Securities and Exchange Commission, which regulates the stock market; the Federal Deposit Insurance Corporation, which guarantees bank deposits; and, perhaps most notably, the Social Security system, which provides pensions to the elderly based on contributions they made when they were part of the work force.

New Deal leaders flirted with the idea of building closer ties between business and government, but some of these efforts did not survive past World War II. The National Industrial Recovery Act, a short-lived New Deal program, sought to encourage business leaders and workers, with government supervision, to resolve conflicts and thereby increase productivity and efficiency. While America never took the turn to fascism that similar business-labor-government arrangements did in Germany and Italy, the New Deal initiatives did point to a new sharing of power among these three key economic players.

This confluence of power grew even more during the war, as the U.S. government intervened extensively in the economy. The War Production Board coordinated the nation’s productive capabilities so that military priorities would be met. Converted consumer-products plants filled many military orders. Automakers built tanks and aircraft, for example, making the United States the “arsenal of democracy.” In an effort to prevent rising national income and scarce consumer products to cause inflation, the newly created Office of Price Administration controlled rents on some dwellings, rationed consumer items ranging from sugar to gasoline, and otherwise tried to restrain price increases.

9. The political & economic changes in the Americas caused by the Depression.

The ‘Great Depression’ was a period in History when business was weak and many people were out of work. The Great Depression began on 29th October 1929, when the stock market in the United States crashed. It quickly turned into a worldwide economic slump owing to the special and close relationships that had been developed between the United States and European economies after World War I. It was the industrialized western world’s longest and most severe depression ever experienced. It ended with the arrival of the War Economy of World War II which began in 1939. Economic Effects: As it was a major economic phenomenon it had serious and widespread economic effects. Trade Collapse. The Depression became a worldwide business downturn of the 1930s that affected almost all countries. International commerce declined quickly. There was a sharp reduction in tax revenues, profits and personal incomes. It affected both countries that exported raw materials and the industrialized countries. It led to a sharp decrease in world trade as each country tried to protect their own industries and products by raising tariffs on imports.

World Trade collapsed with trade in 1939 still below the 1929 level. It set the wheels rolling towards the end of international gold standards and consequently the emergence of the fixed exchange rate system. Reduction in Government Spending. Governments all around the world reduced their spending, which led to decreased consumer demand. Construction came to a standstill in many nations. As a consequence of government actions, the real Gross National Product of nations like United States and Britain fell by 30.5%, wholesale prices fell by 30.8%, and consumer prices fell by 24.4%. Employee Distress Wages were scaled down to 20 percent, whereas 25 percent of the workforce was left unemployed.

This led to decrease in the standard of living pushing the economy further into the depth of the Depression. Breakdown of the Financial Machinery. Thousands of investors lost large sums of money and several were wiped out, losing everything. Banks, stores, and factories were closed and left millions of people jobless, penniless and homeless. In 1929, 659 public sector banks were shut and by the end of 1931 this number rose to 2294. Many people came to depend on the government or charities to provide them with food. Effect on Agriculture. Due to lack of subsidies and loans, farmers were unable to support mass produce leading to under-capacity output. Textile farming faced the major blow.

The period served as a precursor to one of the worst droughts in modern American history that struck the Great Plains in 1934. Although a few segments under agriculture – e.g. cotton – benefited from the crisis, in general the whole agricultural sector experienced a setback. Political Effects. The Depression had profound political effects. In countries such as Germany and Japan, reaction to the Depression brought about the rise to power of militarist governments who adopted the aggressive foreign policies that led to the Second World War. In Germany, weak economic conditions led to the rise to power of Adolf Hitler.

Germany suffered greatly because of the huge debt the country was burdened by following World War I. The Japanese invaded China and developed mines and industries in Manchuria. Japan thought that this economic growth would relieve the Depression. In countries such as the United States and Britain, the government intervened which ultimately resulted in the creation of welfare systems. Franklin D. Roosevelt became the United States President in 1933. He promised a “New Deal” under which the government would intervene to reduce unemployment by work-creation schemes such as painting of the post offices and street cleaning. Both agriculture and industry were supported by policies to limit output and increase prices.

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