The great depression was a period when the economy became stagnant and most of the countries experienced low or no growth at this period. In the United States, the effects of the great depression began in 1930 and continued for almost a decade. The great depression had negative effects in the United States economy. It also caused emotional and psychological torture to most of the affected groups. Several historians and documented letters have different explanations of the exact cause of the great depression in the United States.
Themes of the Great Depression in the United States
Different scholars have different opinions on the themes of the great depression and the importance of each one of them. The main theme can be grouped into themes concerning macroeconomic money supply effects such as production and consumption and structural themes which consist of underconsumption, overinvestment and institutional economics. Several issues highly contributed to these two main themes which were the main causes of the great depression.
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Oral historians emphasize how macroeconomic money supply effects could have resulted to the great depression in 1929. The historians explain how the stock market crash was one of the main themes that resulted to the occurrence of great depression. According to these historians and some letter recordings, the Wall Street 1929 Crash also called the stock market crash was one of the triggering causes of the great depression. According to Milton one of the oral historians, he claims that the stock market crash in 1929 changed the estimations and expectation about the future hence shifting the economies outlook to the negative. The negative outlook dampened the effect on investment and entrepreneurship. Most of the wealth people who could have invested where afraid of doing so. In his book, “Brother, Can you spare a Dime, The Great Depression 1929-1933” this oral historian adds vivid pictures of this period. According to this historian, most of those who were affected by the great depression were the youth and women who after failing to get a job moved to the streets hence resulting to the increased number of the young transients in the 1930’s.
Ben Bernanke another historian, as well as a macroeconomist, argued that it’s the debt-deflation view the resulted to the great depression in US. This was due to the 1920’s widespread use of credit purchases for automobiles, mortgages and even furniture in the United States (Bernanke, 57). This credit purchases boosted spending as well as customer debt. When the price of deflation occurred starting in 1929, people who were in debts where greatly affected. The fall of income and prices also made this group of people hit hard by the depression.
One of the US groups that was hardly hit by the great depression were the farmers. This was due to the decline of the American exports by almost half and the decline of international trade. Commodities such as cotton, wheat and tobacco were adversely affected by the export decline. Due to the decline of exports, the farmers opted for loans one of the factors that resulted into many micro banking institutions being introduced in the rural in the early years of great depression. After the state was hit by the great depression in the 1930’s, most of this micro banking institutions was permanently closed since their clients could pay up their credits.
Some of the factors that resulted to structural depression in America include the lowered aggregated expenditures in the economy which highly contributed to increased number of unemployed people and reduced income. According to John Maynard Keynes, books to reduce the unemployment rate the government had to run deficits when the economy’s growth was slow since most investors were not willing to invest during this period. According to new classical theme, the US great depression was due to decline in productivity which was affected by the implementation of policies that affected the labor market. According to Kehoe and Prescott, the great depression was due to decline in the labor force, productivity and capital stock which generally resulted to decline in the state’s economy. The increased import rate worsened the United States depression status as it resulted to reduction of international trade a policy that hit the US farmers hard during this period.
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Another structural theme that resulted to United States depression is the effect of drought and poor farming processes that resulted to increased soil erosion and poor yields. This resulted to reduced farm produce and resulted from many farmers becoming displaced hence rendered unemployed with no income. According to Joe gentry an oral historian, during the 1930’s, it was really hard growing up. Thou most of the farmer’s children did not go hungry since their parents had cows, chicken and farm produce, getting cash was really hard.
The structural depression theme mostly affected the black American and resulted to unequal distribution of wealth. The great depression had different effects on different people. To the poor and unemployed, it resulted to the increased number of street children. It also increased the number of unskilled laborers and child labor. The great depression resulted to political changes to the left.
Effects of the Great Depression to various groups
The Wall Street crash theme that led to great depression according to several letters adversely affected the working class people. It resulted to reduction of their income, job security and the increase of working hours. Most of the people who were affected had families and malnutrition was common.
Credit purchases increased customers spending in the 1920’s during the great depression; credit availability became hard for both the customers and the business. Hence lenders started to regulate the available credit. The Wall Street crash resulted to many employers closing their businesses hence most people where left jobless with no income sources. Most of the costumers who had purchased their goods using credit purchases were unable to repay their monthly payment hence resulted to repossession of the goods by the lenders (Harold, 105). The repossession of the goods mainly affected the women and children who were left with no shelter. In addition, due to low income rates and increased unemployment rates, most frameless suffered breakups due to the emotional breakdown caused by the great depression effects.
With increased debts, unemployment and even low incomes, most institutions where permanently closed such as banks and luxury automobile companies. This meant some wealthy group of people literally moved from wealth to rags.
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The decline of exports and poor farm yield resulted to increased migration in the United States. The affected farmers where pushed to move from their agricultural based living to go to the urban areas to look for jobs to supplement this income. The migration process which is highly dramatized in several historian stories such as “The Grapes of wrath” affected both the men and women farmers. Black Americans who were casual laborers in these fields where also affected as they were left jobless. This resulted to most of the young black Americans in these regions moving to the streets after feeling they were being a burden to their starving parents.
Some of the New deal that the Americans where left with include encouraging the formation of workers unions to fight for the raise of wages so as to increase the purchasing power by the employed people. To fight the export decline the government reduced the cost of farm production through the Agricultural adjustment act. This measure resulted to the rise of farm prices hence enabled the farmers to sustain their families and reduced the migration rate. Another new deal that the Americans opted for is the regulation of the minimum wages, process, standards of labor and other competitive conditions using NRA. Through the Works Progress Administration, a jobs program was initiated in the mid 1930’s to help provide job for the unemployed.
The US great depression left a legacy of migration to most of the affected groups such as farmers and the unemployed. For some, they were required to physically move to different areas in search of job to be able to sustain their families. To others the migration process was a state of mind and emotions due to change from being financially stable to people who lived in constant fear of being bankruptcy.
US great depression was an era that caused great emotional and financial trauma to most classes of people. It’s due the challenges that many people faced that have made these a subject for many historians to write фищге the subject. There were several causes of great depression with some historians claiming it was caused due to stock market crash while other claim it was due to increased credit purchases in the 1920’s. Other scholars claim it was due to imbalance between the who have and have not that greatly contributed to the great depression that was experienced in US in the 1930’s.The effects that the great depression caused still remains in the minds of the affected people up to date. In addition the effects that the great depression cause to the United States politics can still be felt up to modern days.