Tuesday, 20 March 2012

The Great Depression

The Great Depression was an iconic moment in the American History. Having a capitalist economy system means that there will be a continuous cycle of Boom and Bust meaning that times of prosperity is followed up by recession. This is visible in the Great Depression. In the 1920s America was living in prosperity as they were relishing the affects of mass-production and other factors. Many ordinary people were buying shares because there was a bull market (Share prices were rising). Many people were taking out loans and were confident about buying shares because they thought it will be a full proof plan to get rich quick.  However when the Wall Street crash happened many people were devastated because people couldn’t pay back their loans and Banks went bankrupt. This all had a negative effect on the US Economy and leaving it to spiral down. 

The Depression had left many people unemployed and struggling to live. Businesses and Banks had also been affected by Depression in a negative way.  A new president had come to power called Franklin Delano Roosevelt (FDR). He was very quick to act on the Depression. He spent a lot of money and gave the federal government more power compared to the previous presidents. He created a lot of “Alphabet Agencies “which were aimed to provide Relief, Recovery, and Reform. One of their main successes was how they tackled unemployment. Unemployment had dramatically dropped by the end of FDR’s reign.  

However America only came out of The Depression due to World War 2. The countries industry had to be mobilised and prepared so it could give out an active output. New war goods were being produced which kick started businesses and allowing them to employ more people.  World War Two was ultimately the main cause which led America out of Depression and back into prosperity.

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