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Schule > Englisch > Landeskunde > Referat: The Great Depression 1929

The Great Depression, which approximately ran from 1929 until 1939 had a big influence on the industrialized countries ( Europe, the British Empire, the USA). It led to numerous bank failures, dramatic drops in Gross Domestic Product and industrial production, high unemployment, and so on.
The economy soared to spectacular heights during the 1920’s when wartime restrictions on business ended: The Conservatives controlled the federal government, adopting policies aiding big business, raising tariffs to a highest level ever, to keep foreign goods from competing with American products. Then the new technological developments also improved ( better goods were produced faster and more cheaply than before-> sales of electric washing machines, refrigerators, radios..). In the 1920’s Henry Ford and others revolutioned car manufacturing by introducing the assembly line ( cars got cheaper and so many people bought one) Due to the car-boom other industries ( steel, road, construction, tourism) developed. Americans got more money to handle and so more people than ever invested in stocks and other purchasing. These investments provided companies with new capital for expansion and so the stock market flourished.
Finally the Americans slowed down their purchaising at a time where factories still produced in high rates. This gap lead to a stop of production and thousands of employees were dismissed. People now had no money and no purchaising power. So companies were left without production and fear of producing more products that would not be bought.

The stock market crash:
Because of the economic boom there had been a lot of speculation on Wall Street which pushed the value of stocks far beyond a level that could be justified by earnings and dividends. At that time there was no effective regulation of banks ( preventing irresponsible lending) thousands were tempted to lend out large amounts of money they had not really got. Such unsound practices led to the stock market crash in October 1929.
At the same time the British Treasury put up interest rates to attract foreign investments. Money flowed out of America into Britain so stock market prices in America began to fall. People who realized that the stock prices were falling tried to sell their stocks very quickly to get real money. Due to that several banks ran out of money and were now unable to pay back the money to their clients. That rapid change happened in a few days and there was panic on the American stock exchange. That panic spread very fast and lead to more panic. The New York stock market collapsed which caused a world-wide stock market crash and shocked the whole commercial and financial world.

Devil-circle:
The American banks stopped loans to businesses which led to a cut back on their production. Because of that millions of people lost their jobs when factories and shops shut down. The Americans could not purchase that much and so the businesses suffered even more. More banks failed and foreign trade decreased sharply which led to a loans stop by the bank.

Results:
By the early 1930’s the nation’s economy was paralysed and ruined: nearly 13 million unemployed and many others had only part time jobs. Farm income declined so rapidly that more than 750000 farmers lost their land. Hundreds of thousands of people lost their life savings because of bank failures. Many Americans went hungry, stood in bread queues and went to soup kitchens to get their meal from charities.
The car industry had a sales break of 65% and the iron- and steel industry 59%. The tobacco and textile industry were lucky and no sales break. The agricultural market was hit the hardest with almost 70 %.

Help ( New Deal):
Early in the depression, President Hoover had promised a lot of things to ensure his next election. But in 1932 the Depression was even worse than in 1929. The Republicans selected Hoover for re-election and the Democrats chose Franklin Delano Roosevelt, who promised government action to end the Great Depression and reforms to avoid future depressions. The people reacted and Roosevelt won a landslide victory.
The New Deal ( promised by Roosevelt) was a massive programme of reconstruction, government investment and reform. They limited speculation and gave insurance in case of bank deposits ( that meant a guarantee that banks would not fail). New government agencies were born to help fight the Depression by providing jobs, extending credits and subsidies to farmers and of course developing a social security system ( Social Security Act).The reconstruction programmes helped reducing the unemployment rate and set up new social least standards ( unemployment benefit and minimum wage). Despite of that many people had to live under very poor conditions. To combat unemployment many building programmes were set up. The bank crisis was stopped by closing 25% of ruined banks. Increased wages meant more purchasing power, and industry began to recover. But hard times dragged on until just before World War 2, when spending money on military items stimulated the economy.
There you can see that Roosevelt’s New Deal was a turning point in American history. It marked the start of a strong government role in the nation’s economic affairs that has continued and grown to the present day. At the same there was strong resistance against the interference of Government in economic affairs. Some claimed it was against the Constitution and had socialist tendencies, which was partly approved by the Supreme Court in 1935.
In 1941 Americas economy reached the production level from 1929 and only after the Second World War the American economy began to flourish.
Jahr BSP[4], nach jeweils gültigen Preisen, in Mrd. Dollar BSP, nach Preisen von 1929, in Mrd. Dollar BSP, Festpreise pro Kopf in Dollar Arbeitslose, in Tausend Prozent der Zivilbeschäftigten 1919 78,9 74,2 710 950 2,3 1929 104,4 104,4 857 1550 3,2 1930 91,1 95,1 772 4340 8,7 1931 76,3 89,5 721 8020 15,9 1932 58,5 76,4 611 12060 23,6 1933 56,0 74,2 590 12830 24,9 1934 65,0 80,8 639 11340 21,7 1935 72,5 91,4 718 10610 20,1 1936 82,7 100,9 787 9030 16,9 1937 90,8 109,1 846 7700 14,3 1938 85,2 103,2 794 10390 19,0 1939 91,1 111,0 847 9480 17,2 1940 100,6 121,0 916 8120 14,6 1941 125,8 138,7 1040 5560 9,9
Internet-research, 28.12.05
Carolin Görner
The Great Depression 1929

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