Great Depression Assignment Help
Consider the Great Depression. In your opinion, what were the THREE MOST IMPORTANT causes of the Great Depression? Explain each cause carefully.
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Progressive Era and main causes of Great Depression
Great depression of the late 1920s and 30s is the longest and the most severe economic downturn witnessed in the modern history. Almost every country in the world got impacted by the great depression. There is severe impact on the reduction in the industrial production, fall in prices of the products (Deflation), unemployment, poverty hikes and homelessness.
Progressive era (Mooser, 2015) in the history of the United States marks the two decades immediately before the occurrence of the Great depression and continues further. It is an evolutionary era rather than revolutionary. The social and economical changes and starving of the people to move towards the modern times propelled the changes. First progressive era got developed as a social movement and later became political movement too. The fight against the corruption (Muckraking), women autonomy, progressive religious reforms etc marked these times (Rothbard, 2017). Increased consciousness of the people and evolutionary courage to take up right enlightened decisions makes up the important changes in this time (Gray, 2017).
The key causes of the great depression are as follows,
Stock market crash of 1929: During 1920s there is increased expansion of the US stock market. Shares investment has seen to be an easy way to gain money. People invested everything they had in hands in the stocks and the returns also occurred in the same manner. Hundreds of millions of shares were carried on margin by the end of the 1920s. The purchase power of these shares is financed with the loans taken from the banks, which are expected to be repaid with the profits generated from the ever increasing share prices. However with the decline in the share prices in 1929, where the total fall in prices exceeded more than 33%, the people undergone shock and lost trust on the economy, investments taken back, and spending trends failed. All these aspects contributed to the reduction in the industrial output and the job losses as well (Hoover, 2015).
Significant gold outflows from United states, due to fall in purchases and the increased exports with less prices created gold standard inbalances. All the countries which do not have gold stocks got their currencies devaluated. This resulted in reduction in the production and unemployment in several countries, which mean spread of the great depression to these countries.
United States protective trade system and imposition of the new regulations like Soot-Hawley Tariff Acts resulted in extreme tariff imposition on the countries. This resulted in retaliating measures; this ultimately resulted in the reduction in the production from these countries as well also worked on to reduce the global trade from these countries as well.
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