It is quite challenging to imagine living with scarce basic resources such as food, clothing and shelter, all of which are the basic essentials for survival. People living privileged lives shun away such thoughts, not wanting to even think about standing in long lines at the charity soup kitchens or finding a new bed each night at homeless shelters. However, the reality is that our ancestors, relatives, friends and strangers making up the international community all suffered through these dilemmas even though they were had been living the ideal and privileged lives before. The Great Depression shook everyone’s lives, putting them upside down, and impacted on the history for eternity. Taking its place in the 1930s, the Great Depression affected the global economic health, causing severe losses before the Second World War (Pagliarini).
Growing up, youngsters are usually taught by wise grandmothers or philosophical and practical teachers that saving up and investing in future is crucial, therefore, one should concentrate on saving and not spending. They are given the lesson that just as the money increases over time, it decreases gradually as well, so it is imperative to keep a keen eye on checks and bank balances. However, the events that took place on October 29, 1929 proved those lessons to be wrong and that tragedy usually attacks suddenly and uninvitingly. On that day, which became famous as the Black Tuesday, the American stock market crashed so severely that it created a domino effect throughout the world, causing a severe economic depression (“Library of Congress”).
It is effortless to pinpoint and blame the stock market crash of 1929 as the sudden event that decreased the monetary value in order to closely understand how the Great Depression had started one must look at the long-term causes. Banks became increasingly unpopular in the 1920s because of their high interest rates and structural failures. The US Federal Reserve started increasing the country’s money supply which was an action reply for England’s choice to rely once again on the gold standard. Furthermore, historians and financial experts state that the recessions prior to the Great Depression had been taken very lightly by experts and both the government and private free markets had to be blamed (“Library of Congress”).
Among the countless theories about the various causes of the Great Depression such as Marxist, Austrian and New Classical, such famous economic analysts named William Trufant Foster and Waddill Catchings, who had experienced the Great Depression at first hand, had a practical and one of the most accurate theories to date. Today, their view is held in the highest regard and consulted within some financially critical situations. Their focus was on the inequality as they proposed that there had been a significant gap between the supply and the demand which directly caused the financial downfall. This meant that the American economy was constantly producing much more than the consuming population could afford which directly caused an unequal wealth distribution (Allgoewer).
The experts provided the solution as well which had the governments redistributing the purchase powers to consumers. Because of the high use of machines and factories, the government should not start new projects and focus on the ones left undone. Their theory was supported by M. King Hubbert who intertwined the productivity shock theory stating that, “It cannot be emphasized too strongly that the productivity and employment trends we are describing are long-time trends and were thoroughly evident prior to 1929. These trends are in nowise the result of the present depression, nor are they the result of the World War. On the contrary, the present depression is a collapse resulting from long-term trends” (Allgoewer).
Productivity shock referred to the rapid development of the electric and advanced technological projects with mass productions of machines, which replaced humans.
President Roosevelt is mostly credit with taking the country out of the Great Depression around 1933 because of his New Deal policies. The policies are given the credit for accelerating the recovery period, increasing jobs by 15% right away. Through his New Deal policies and actions such as passing the Banking Act of 1935, Roosevelt substantially lowered interest rates and set limits on bank activities. Ben Barnanke, who was the Federal Reserve Chairman, stated that, “There is a strong connection between a country’s economic success or decline and the Federal Reserve’s organization. This means that the institution must be analyzed by rebuilding and reconstructing entire financial systems as the Great Depression required. There needs to be international cooperation” (257-76).
Another group of economic analysts firmly believe and point at the historical data that the Great Depression, in fact, started to decline with the start of the World War II and ended after the war, which ironically helped the global economics. The most important effect of the World War II was that it had created jobs and in the United States alone, the unemployment ratings dropped by more than 10%. However, the exact events leading up to war were not as thriving. Specifically, the President Herbert Hoover was blamed for much of the Great Depression because of his political policies and practices. As the president, Hoover needed to think of the way to raise local profits which led him to raise taxes on imported goods in the form of the Smoot-Hawley Tariff (Nordeen).
The Smoot-Hawley Tariff’s biggest drawback was that international nations raised taxes on the American goods as well, which severely wounded the American international revenue. The President Hoover was bombarded with dilemmas along with the economic crisis; such natural disasters like the Dust Bowl drought which devastated the mid-western states. Perhaps, the biggest dilemma was that people lost their homes and, thus, depended on the government for shelter arrangements. The President Hoover was greatly criticized and the homeless housing set-ups were nicknamed as “Hoovervilles.” When Roosevelt took an office, the United States’ Federal Government started getting directly involved with giving people the economic safety cushioning and many of the federal financial duties from then have become active in the today’s government as well (Nordeen).
Statistically, the Great Depression was the longest and the toughest economic downfall in the 20th century; the one which made rich nations fall to their knees and the poor nations get buried deeper into poverty. The strong and capable men suddenly did not know what to do with themselves as jobs were scarce. This was because virtually all careers had been paused from farming to industrialists. Because of the hurt egos and feelings of worthlessness, men greatly suffered psychologically as the depression became common. Analyzing the psychological impact of the Great Depression, Monika Ardelt states that, “Thus, a crisis can either result in psychological growth or psychological deterioration. People who are unable to learn the appropriate lesson from these events are likely to feel defeated and weakened through the encounter of hardship whereas those who do may come out stronger and wiser than before” (295).
In fact, the social damage of depression was so immense that the domestic violence, abuse, divorce and suicide rates sky-rocketed. Even children and teenagers ran away in great numbers from home because they did not want to become as unwanted burdens. It was only after Roosevelt’s New Deal work relief programs that these rates showed a decrease and the Second World War helped to diminish the psychological impacts altogether which had been triggered by the lack of jobs. In fact, the result was the opposite one as women came into the work force to replace men and to aid the country. The major long term effects on the families were such that those who had witnessed the Great Depression were loyal to their jobs of the post-depression and post-war period, while the future generations would jump from job to job, not realizing the importance and taking the work for granted (“Library of Congress”).
At the time of crises, the ray of hopes are seldom seen; however, it is the part of the life’s cycle that what goes around comes around, and this is the same case with promising and flourishing times. The Great Depression, without a doubt, is one of the greatest hardships for the American people ever met came to its end, but not without leaving a trail of tears behind. Many people captured their experiences through writing and hoping to provide the future generations with a glimpse on their past realities. John Steinbeck published the historical best seller in 1939 which locked the Great Depression within its pages and reached many hearts. Explaining the Depression’s cause, Steinbeck writes that, “And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands, it is taken away” (238). In fact, the Great Depression inspired many creative projects, awarded countless awards for diligent survivors, and left a permanent mark of the brave survival on the American souls, forever challenging the definition of the American Dream.