A Comparison Of The Great Depression Of

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A Comparison Of The Great Depression Of 1922 And I Essay, Research Paper A comparison of the Great Depression of 1922 and its effects between the United States and the rest of the world The introduction of the discussion will focus on the origins of theGreat Depression and the escalating events that led to it. This willprovide adequate foundations to bring up questions and attempt to answerthem in an objective fashion as to why and how the Depression affecteddifferent industrialized countries in different ways. The core of the debate will consist of detailed comparable analysesof the consequences of the Depression with an emphasis on the economicaspects. The conclusion will provide a brief overview of the ways used bythe different governments to get out of that dark episode

of world economichistory. When studying the Great Depression and it’s effects, it is notunusual for historians to choose World War I as a starting point for theirinvestigation. The reason for that is the importance of the repercussionsthe conflict had on the economies of all the countries that were involvedin it. First of all, the War made it impossible for Europe to maintainprevious levels of production. For example, before the War, France, theU.K. and Germany accounted for about 60 percent1 of the world’s exports ofmanufactured goods, a share of the market which they could not sustainduring the conflict. Consequently, Europe took many of its markets to theU.S. and Japan. The stunted growth of the European economies meant a lowerdemand for raw materials, which in turn

lowered the demand for Europeanexports. In agriculture, things didn’t look any better, as it was the sectorwhich employed the most people. At the end of World War I, Europe wasforced to import food from the U.S.. Moreover, these transactions wereconducted on a credit basis since Europe could not afford to pay for itspurchase at that time. Clearly, the U.S. was going from being a traditional debtor ofEurope before World War I to becoming its creditor: America had financedthe war and it was issuing loans for its reconstruction. However, theattitudes in the U.S. were evolving in an unusual direction: an increasingnumber of American financiers were starting to literally seek ut potentialborrowers which led to competition among U.S. banks and the spreading ofunsound lending.2 The

main object was to “do the most business”, even atthe expense of essential caution. What seemed like a beginning of recovery from the Great War, was infact an immense accumulation of debts, which made the internationaleconomic order vulnerable to depression. Analyzing these events with theinsight we have today, they seem even more unbelievably audacious given thehigh instability of the borrowing nation. (i.e., Europe) The triggering event was the crash of the Wall Street stock marketin October of 1929. The stock market collapsed after steady declines inproduction, prices and incomes over three previous months which forced thespeculators to revise their expectations. Anxiety soon gave place to panicwhich led to the crash. However, the depression affected the

differentindustrialized countries in various ways and degrees of intensity. The depression was of especially great magnitude in the U.S. because there were not any welfare benefits for laid off workers. In theperiod between 1929 and 1933, money income fell by 53 percent (real incomefell by 36 percent.)3 As a consequence, demand fell significantly, whichin turn led to lower production and more layoffs– up to a high of 25percent rate of unemployment in 1933. Despite the severity of the situation, the Federal Reserve did notpursue a monetary expansion on policy which would have stimulated theeconomy through lower interest rates and increased the stock of money incirculation. This inaction is often attributed to the fact that marketinterest rates in 1930-1931 fell to very low