The Great Depression Research Paper Example | Topics and Well Written Essays - 2500 words

The Great Depression - Research Paper ExampleIt began in the U.S but quickly spread to the entire world. It hit hard on major cities, especially those underage on heavy industry. It took a toll on prices, tax r stock-stillue, personal income and profits. Inter republical trade shrunk by over 50% to 75%. Unemployment in the U.S increased to over 25%, while GDP knock off by over 36%. Consumption declined and so did the industrial output. Additionally, it had political ramifications. It guide to the election of chairman Roosevelt in U.S and the rise of Hitlers Nazi regime in Germany. Historians argue that it was one of the major causes of the human beings warfare II. Not even Roosevelts New Deal could pull the U.S economy out of the depression. Countries began to witness in the mid 1930s. Ironically, the beginning of World War II marked the end of the Great depression. Causes Recessions in a business cycle are chemical formula, and a product of balances between demand and deliv er. What turned normal events into a recession has been a subject of widespread debate. A combination of domestic and international factors was blameable for the great depression structural weaknesses and individual events. a) Boom to Bust The period following World War I is widely regarded as an era of prosperity for the American people. U.S.A had just emerged as a wind superpower. Business started thriving and the quality of life improved dramatically. There were post war reconstructions and low enliven rates which ignited the boom. President Coolidge in his state of the nation address in 1929 noted that the nation had never witnessed better prospects than it did then. Automobiles were growing cheaper and more popular. Stock prices were on an upward trend. In fact, the Dow Jones Industrial mean(a) quadrupled between 1924 and 1927. The market experienced the biggest bullish run ever. Many people thought that this was a stable phenomenon. Many investors were lured into the stoc k market, some investing on margin using loans. According to Suddah (2008), out of either 5 dollars loaned by banks, 2 were spent to buy stock. In essence, there was a huge supply of money, which primarily led to speculative stock prices. Besides stock markets, there was a boom in the real estate sector. There was a surge in the real estate sector particularly because of the low market interest rates. Why did the boom to fatigue contribute to the depression? Boom and bust is a normal feature of a capitalist economy. It was bound to end. It had been a period excessively tripping monetary policy. There was a general absence of proper regulation in the monetary sector. It led to excessive speculation, where investors speculated that the parcel price would keep the upward trend. As a result of increased demand, the share prices became artificially higher and did not reflect their real value. The speculative euphoria and the boom psychology created profound weaknesses and imbalance s within the economy. Consequently, the nation was not able to deal with the downward spiral in the economy. b) Stock trade Crash of 1929 The stock market crash is widely regarded as the major cause of the depression. The artificial prices of stocks were lastly destroyed. What happened was that when the bull market came to an end, share prices began to fall as from September 3 1929. Speculators began sensing loses to their savings and even homes. On the Black Thursday, there were many people trying to offload their shares. That increased the supply while very few investors were willing to buy.