The-Great-Depression

GreatDepressionPage2ContentIntroductionBackgroundTheprocessEconomicandsocialproblemsCausesHistoricalinfluencePage3IntroductionTheGreatDepressionwasasevereworldwideeconomicdepressionthattookplacemostlyduringthe1930s,beginningintheUnitedStates.ThetimingoftheGreatDepressionvariedacrossnations;inmostcountriesitstartedin1929andlasteduntilthelate-1930s.Itwasthelongest,deepest,andmostwidespreaddepressionofthe20thcentury.Page4theexpansionofAmericaneconomicforcestechnologicalinnovationfixedcapitalinnovationrationalizationofenterpriseproductionandmanagementHowever,duetotheprevailingstockspeculation,prosperityitselfhasacertaindegreeofhypocrisy,sothatthisprosperitybreedsanewcrisis.BackgroundAfterWorldWarI,theeconomyoftheUnitedStatesdevelopedrapidly.ThisperiodcoincidedwiththepresidencyofPresidentCoolidge,sotheeconomicprosperityofthisperiodintheUnitedStateswasalsoknownasCoolidgeprosperity.CoolidgeprosperityPage5Businessmen,academiceconomistsandgovernmentleadersallexpressedconfidenceinthefuture.FinanceMinisterAndrewMellonalsoassuredthepublicinSeptember1929thatthereisnoreasontoworrynow,andthisboomwillcontinue.In1929,theAmericaneconomybecamemoreprosperous.TheindustrialproductionindexoftheUnitedStatesaveragedonly67in1921(100in1923-1925),butroseto110inJuly1928and126inJune1929.MoreimpressiveisthestockmarketintheUnitedStates.Page6TheprocessThestockmarketturnedupward,returningtoearly1929levelsbyApril.Early1930Atotalof$30billioninwealthdisappeared.November131929knownasBlackTuesdaysuddendevastatingcollapseofU.S.stockmarketpricesOctober291929Interestrateshaddroppedtolowlevels.Mid-19301929Page7AseveredroughtravagedtheagriculturalheartlandoftheU.S.Mid-1931Theeconomicdeclinehadpushedworldtradetoone-thirdofitsleveljustfouryearsearlier.1933Adeflationaryspiralstarted.1931U.S.Smoot–HawleyTariffActandretaliatorytariffsinothercountries19321933Page8MoneysupplydecreasedconsiderablybetweenBlackTuesdayandtheBankHolidayinMarch1933whenthereweremassivebankrunsacrosstheUnitedStates.MoredetailsILLUSTRATORPHOTOSHOPWORDPRESSWEBDESIGN68%54%73%57%Page9U.S.industrialproduction(1928–39)TheDowJonesIndustrial,1928–30MoredetailsPage10BroadStreetafterthe1929crashCrowdgatheredattheintersectionofWallStreetMoredetailsPage11Mellonpulledthewhistle,Hooverrangthebell,WallStreetgavethesignalandthecountrywenttohell.Page12EconomicandsocialproblemsThecollapseofthestockmarketCrazyrunsBankfailuresFactoryclosuresUnemploymentofworkersImpoverishmentOrganizedresistanceThebrinkofcivilwarPage13ThevillageswherethesehutsgatheredwerecalledHooverVillage.HooverbagsarecalledHooverbags.Vehiclespulledbylivestockbecausetheycan'taffordtobuyfuelarecalledHoovercars.EvennewspaperscoveredbyhobossleepingonstreetbenchesarecalledHooverblankets.HooverVillagePage14UnemploymentIntheUnitedStates,thetotalnumberofunemployedpeoplereached8.3million.IncitiesacrosstheUnitedStates,poorpeoplequeuedforfoodreliefforseveralblocks.Fivetosevenmillionpeopleareunemployedandhavetowaitinlongerqueuesinthelabormarket.Page15SomepeopleinWashingtondidgotothewoodstosetfiresothattheycouldhirehimasafirefighter.AjobagencyonSixthStreetinManhattanrecruited300people,and5,000did.SomeonedidstayovernightattheentranceoftheDetroitJobExchange.TherewasindeedanArkansasmanwhowalked900milesinsearchofajob.HorriblestoriesPage16WorldwideimpactsUnitedStatesUnitedKingdomFranceGermanyIndustrialproduction−46%−23%−24%−41%Wholesaleprices−32%−33%−34%−29%Foreigntrade−70%−60%−54%−61%Unemployment+607%+129%+214%+232%Changeineconomicindicators1929–32Page17CausesThetwoclassicalcompetingtheoriesoftheGreatDepressionaretheKeynesian(demand-driven)andthemonetaristexplanation.TherearealsovariousheterodoxtheoriesthatdownplayorrejecttheexplanationsoftheKeynesiansandmonetarists.SUPPLYDEMANDTodaythecontroversyisoflesserimportancesincethereismainstreamsupportforthedebtdeflationtheoryandtheexpectationshypothesisthatbuildingonthemonetaryexplanationofMiltonFriedmanandAnnaSchwartzaddnon-monetaryexplanations.TargetPage18JohnMaynardKeynesBritisheconomistJohnMaynardKeynesarguedthatloweraggregateexpendituresintheeconomycontributedtoamassivedeclineinincomeandtoemploymentthatwaswellbelowtheaverage.Keynes'basicidea:Tokeeppeoplefullyemployed,governmentshavetorundeficitswhentheeconomyisslowing,astheprivatesectorwouldnotinvestenoughtokeepproductionatthenormallevelandbringtheeconomyoutofrecession..01020304050KeynesianCausesPage19TheGreatDepressionintheU.S.fromamonetaryview.Realgrossdomesticproduction1996-Dollar(blue),priceindex(red),moneysupplyM2(green)andnumberofbanks(grey).Alldataadjustedto1929=100%.06JANMonetaristsarguedthattheGreatDepressionwascausedbythebankingcrisisthatcausedone-thirdofallbankstovanish,areductionofbankshareholderwealthandmoreimportantlymonetarycontractionof35%,whichtheycalledTheGreatContraction.28AUG15DECTheyalsoarguedthatthedownwardturnintheeconomy,startingwiththestockmarketcrash,wouldmerelyhavebeenanordinaryrecessioniftheFederalReservehadtakenaggressiveaction.MonetaristCausesPage20DebtdeflationCausesIrvingFisherarguedthatthepredominantfactorleadingtothe