Analysis of Downfalls of the Great Depression and Its Consequences
The following paper will examine the major economic downfalls that have occurred during the Great Depression emphasizing on the Wall Street Crash of 1929. This will be carried out by analyzing the methods used in order to cope with the issue, and understanding how it affected the global economy as a whole. After all, there will be a clear conclusion that provides my personal perspective on the main topic by providing a statement on why I agree or disagree with the provided question.
The Great Depression is considered to the most detrimental economic depression of modern history. It was a long-lasting period as it went on for almost 10 years, from 1929 until 1939. Without a doubt, one of the biggest contributors to this vast depression is the Wall Street Crash of 1929. The crash was not the sole reason, but it certainly accelerated the downfall of the economy as billions of dollars went down the drain on “Black Tuesday”. Unemployment rates were plummeting and workers were getting salaries that were not enough to sustain them properly. Additionally, banks in the USA were drowning in debt as there just wasn’t enough money to give back to the banks they took loans from. By 1933, approximately 50% of America’s banks were closed down due to their failure of staying operational. Production levels were steadily declining and this was mainly an issue in the agricultural sector as it was severely struggling. All these impacts of The Great Depression lead to the decrease of 50% of all of America’s GDP, decreasing from $131 Billion to $55 Billion.
Other counties stopped trading with United States of America as it was not economically stable. Moreover, countries that had provided loans to the USA were requesting to get paid back the money they had loaned. Although as mentioned previously, they had no money to return back to the lenders. The Great Depression affected global economies all over the world, leading to chaos building up globally. Germany is a prime example, as America was weakened due to their economic tragedy, Germany started to invade neighboring countries and favored a dictators rise into power. Other countries like Canada and the United Kingdom were negatively affected in terms of unemployment occurring in their countries. Also, South American countries were severely punished by The Great Depression as America stopped importing their goods, e.g. Brazil not exporting cocoa beans.
This great economic crisis was partially solved thanks to Franklin D. Roosevelt. He was elected president of the United States of America in 1933, and in his first 100 days of service, he implemented a new deal that launched 42 agencies. This long-lasting economic downfall came to an end in 1941. Before the end of the second World War in July 1944, two new institutions were created with the main focus of establishing economic balance & cooperation, alongside financial development in order to create a more robust global economy. These institutions were the International Monetary Fund (IMF), and the World Bank.
As previously stated in this essay, the USA lost $76 Billion in the Great Depression, especially during Wall Street Crash of 1929. This amounts to $1.1 Trillion when adjusted for inflation in today’s value. That puts into perspective how much worse the losses were and how much it cost America, and the major influence it had on the entire global economy. All these factors combined, led to a declining economic growth, costing the U.S. a staggering amount of $648 Billion and costing 5.5 Million people to lose their place at the workplace, skyrocketing unemployment.
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