The American Great Depression

The American Great depression has been a predominant discussion point in the field of Economic History and is still considered the longest most unembellished depression ever experienced by the industrialised western world. It sent Wall Street into trepidation and whipped out the majority of American investors. The Great Depression was seen as cataclysmic period for America where there were declines in consumer demand and misguidance within governance which transmuted to an increase in financial anxieties around the state. The Great Depression left a plethora of unemployed people in the US, an approximate of 13-15 million citizens which was just more than 20% of the American population at the time. Economists had realised the paramount importance

The main reform that was created was The New Deal and although it had stimulated much economic hope in the hearts of people, it was never a lucid effort in dealing with the innumerable fundamentals of The Great Depression. There were many contradictory factors in The New Deal and people found it to be shambolic at times due to its inconsistencies. (EXAMPLE) The New Deal was built to correct the tribulations of the current system but instead altered the system without achieving the key goals it set to. The Second World War did what The New Deal could not, it geared the economy for maximisation of production as well as permanent employment. With the arguments highlighted above this paper is able to formulate a thesis statement that states that ‘The New Deal’ was in fact a failure in combating the great depression. The paper seeks to demonstrate this by illustrating the history surrounding the great depression in terms of what caused it and its impact it had on the economy. The paper furthermore will then converse the reform and procedures that were taken to combat The Great Depression. In addition to this there will be an emphasis placed on ‘The New Deal’ on how it failed and in what ways it was a

There was a drastic drop in consumer spending and a pile up of unsold goods which slowed down production. Whilst this was happening stock prices continued to rise and by the end of that year prices had reached levels that were unjustifiable from anticipated future earnings. During the peak of The Great Depression, industrial production in the US dropped by 47% and the real GDP had declined by 30%. The most concerning out of these statistics was the unemployment rate which was said to have exceeded 20% at the height of The Great Depression. The average income of a conventional American family had decreased by 40% from 1929 to 1932. In addition the GDP had decreased by more than 25%. The pivotal cause of The Great Depression was the decline in spending that led to a decline in production. Nevertheless there were many other reasons that contributed such as the stock market crash where consumer purchases of resilient goods and business investment fell sharply after the crash. The most likely explanation is owing to the uncertainty of future incomes generated by the financial crisis. One of the very first clarifications for the causation of The Great Depression is owed to the gold standard.

The gold standard was a monetary system where a countries currency’s value is directly linked too gold. Several economists believe that the Federal Reserve Bank instigated or allowed