The Great Depression: Unemployment and Deflation

The Great Depression was the historically worldwide tragic economic downturn of the industrialised world that took place in 1929-1939 causing the stock market to crash. Even though the Great Depression derived and occurred in the United States, in almost every country in the world, it triggered dramatic declines in productivity, significant unemployment and extreme deflation. Arguably, globalisation was one of the biggest faults that caused the devastating Great Depression because globalisation removed the importance of diversity within nations. Therefore, nations would make the same mistakes endlessly by entering international agreements that forces them all into similar errors.

The economy became highly globalised in the late 1920s, it started when banks were deregulated after the First World War, money supply was taken out of banks' hands and was newly governed by a return to the gold standard. The gold standard was regulation of currency to gold the conversion rates, which was controlled mostly by Great Britain and the USA. The shipping, mining and steel production was predominantly controlled by large companies on a global basis.

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Banks lent through frontiers to each other, safe to the gold standard. The export assurance has lubricated international trade. There was a massive spread of western lifestyle around the world, for example how people dressed, American movies and modern production and financial methods.

In fact, the European Empires made sure that this power influence has expanded to even as far as Africa, India and South East Asia. There were vast stream ships that ferried individuals and goods to every corner of the globe.

The entire world was essentially globalised, and everything had become sufficiently interconnected and interdependent but also ready to come crashing down. What people failed to understand was that a degree of economic separateness means one economy can fail without the rest crashing.

The advent of the Great Depression and the Second World War brought a drawback to further globalisation. The globalisers of the 1920s for example, the Republican President and officials, corporate and banking institutions were inevitably constrained by their own agendas and powerful convergence of power that elevated domestic economy over international order. In the end, the drive to privatise decisions and policies was based on the 1930's Smooth-Hawley Tariff and colonial trade interests, that reserved British Empire markets for members of states and excluded or discriminated against outsiders like America. The devastating Smoot Tariff of 1930 which increased average tariff rates to nearly 60 per cent) prompted American international trading partners to retaliate by raising tariffs on goods made by the US.

The result was a downturn in international trade and a further decline in global economies. This means there was a huge decline in trade in the1930s, but this was also combined with even more accelerating trade declines all over the world, all because Americans imposed tariffs on everybody. Therefore, the economy has such a tough time recovering. Yet politics could not be taken out of the economy neither could entrepreneurs who could not be trusted to run the global trading and yet finance system, nor were they capable of it. The Republican governments have embraced a strategy of techno globalisation policy but have also refused to take responsibility for handling the world economy through policies. They were unable to do the demanding campaigns that included domestic political haggling on issues such as reducing war debt and tariffs for example, that were required to continue their brand of internationalism.

This has proven particularly so when economic times during the Great Depression spiralled from prosperity to misery. On the other hand, contradictory as governments turned away from attempts to coordinate and integrate the international economy in order to cope with domestic turmoil, technological advances continue to weaken the obstacle of time, ignorance and distant that divided nations and people. In the 1930s, they saw some of the major, significant improvements in air travel and mass communications, particularly movies and short — wave radio.

A few leaders in government and business dared to speak out for greater international economic cooperation at a time when dire economic conditions forced most government leaders to think local. Therefore, according to the American Foreign Relations, 'Thomas J. Watson, Jr. the head of International Business Machines, also known as (IBM) and the International Chamber of Commerce, mimicked secretary of State Cordell Hull in proclaiming that freer international economic relations meant world peace and that if goods did not cross boarders, he feared that armies would.' (Americanforeignrelations.com, 2020)