Research Project on The Great Depression
The Great Depression of 1929 that lasted until 1942 was a very dark era in the history of the Unites States. Many people were ruined, killed, or simply devastated by the events that occurred during those dark years in the 1930s.
But the seed that sprouted into the Great Depression was planted early in the 20th century. World War I caused a vast demand by Europe for American goods. These goods were sold to Europe on a credit basis due to the lack of ability to pay on account of the after effects of the war. This was widely accepted among Europeans and Americans and seemed to be a good idea. The truth behind all these loans was a vast accumulation of debts which would ruin the United States within the next few years.
When the stock market crashed in 1929 it sent the United States into a downward spiral. Thousands of workers were laid off and without the benefits of welfare, money income fell by 53% and the American worker was up the creek without a paddle. Stock values dropped rapidly on October 24,1929. This day was named “Black Thursday” followed by surprisingly steady stock prices that next Friday and Saturday. The following Monday stock prices resumed in their decline. 16,410,030 shares of stock were sold on Tuesday, October 29. Countless people lost their life savings and other huge sums of money and stock prices fell far below the price that was initially paid for them. Banks and other businesses also lost tremendous amounts of money in stock and had to shut down. The closing of banks sparked a big issue of people not being able to get their money out of them. Riots broke out outside of banks with the people demanding their money. Money which the banks simply didn't have. The stock market fell steadily for the next 36 months.
President Herbert Hoover was the unlucky man in office when the depression hit. In 1932, Franklin Roosevelt was elected to replace Hoover and made reforms that gave the government more power and helped to lessen the severity of the depression. Roosevelt handled the harsh times very well and was able to ease the pain felt not only throughout the nation but throughout the world.
The Great Depression affected almost every country in the world. It enabled Adolf Hitler to rise to power in Germany and do many of the horrible things he did while running Nazi Germany. Some people say that the depression was one of the sparks of the World War.
The economy began to break down and did so for quite a long time. From 1930 to 1933 the prices of industrial stocks fell 80 percent. Large sums of money were lost by banks and individuals who invested in stock. Between those four years, 9000 banks failed thus wiping out the savings of millions of people. The widespread failure of the banks made it harder for industrialists to get loans. This lack in money caused a dramatic decrease in production quality and quantity. This drop in production led to a drop in employment. The total value of Unites States goods dropped from $104 billion to $56 billion in only 3 years.
Foreign trade also took a violent blow. Which is obvious because the United States couldn't even provide for itself much less the rest of the world. Many tariffs were placed on imports and exports. Most significant was the Smoot-Hawley Tariff Act of 1930 which increased the number of tariffs greatly. Thinking the law would reduce the price on goods, President Hoover signed it. In reality the act made tariffs rise so high, foreign countries raised tariffs on U.S. goods as well.
During this time prices of agricultural goods fell by one half. This was caused by the high tariffs making the export of goods very unprofitable. The farmers in effect produced a surplus of crops. This surplus made the price of crops drop and many farmers had too much food than they knew what to do with.
But getting away from the industrial failures of the U.S., many people's lives were destroyed. Millions of Americans suffered as a result of the happenings. Many people died simply from malnutrition and disease. Thousands of homes were lost due to the lacking ability to make mortgage payments. Nearly 25,000 families and 200,000 people were left to wander around the country in a search for survival. Welfare agencies opened up and religious missions tried to offer as much support as possible to the homeless masses. Once successful people were lowered to stealing food or eating scrapes out of the garbage cans. Some people built shacks to live in and began to call them “Hoovervilles” which was a stab at the President who was unable to stop the bleeding and end the depression. Another problem arose when farmers decided to not ship their goods to markets in hopes of a rise in prices. This backfired and put the country into more trouble because now food was even harder to obtain. As if problems weren't great enough already, a series of droughts and dust storms swept across the mid-West and Southwest regions of the country. The term the “dust bowl” was given to these states. These elements of nature wiped out thousands of farming families. John Steinbeck's The Grapes of Wrath outlined the hardships felt by many of the farming families who were in desperate need of work. The rumors of elaborate orange plantations and other exotic fruits in California seemed as a job opportunity for the homeless farmers in the “dust bowl”. The sad reality was that the plantations became crowded quickly and work was no longer needed. Many families spent months traveling from the mid-West to arrive in California to find no work.
Back in Washington, Hoover had ideas of his own. He believed that if business was left alone then it would work itself out if not interfered with. Hoover stated that local governments should give to the needy in hopes of helping them get back on their feet. This idea looked good on paper but when it came down to it the local government didn't have the money to pay the needy. This caused problems in the government. However in 1932, congress passed the Reconstruction Finance Corporation which was Hoover's most successful anti-depression strategy. The RFC was able to provide some relief to by lending money to the necessary things that were needed to break the nation of the depression. The RFC lent money to banks, railroads, and other large industrial powers. However, the American public didn't feel that Hoover did enough to help the depression. Franklin Roosevelt was elected president in 1932.
Franklin Roosevelt believed it was the governments job to fight the depression. Roosevelt's plan was called the “New Deal”. The “New Deal” had three main purposes. It provided relief for the needy, it provided jobs and encouraged business, and it reformed business so that such a depression would not occur again. Many agencies were created in order to support the “New Deal”. These agencies provided rules and regulations for business and industry, helped regulate farm production, and tried to improve a variety of other things. The government also tried to stimulate big spending by businesses by spending large sums of money itself. This proved to be affective because money began to circulate again. Trade was increased by lowering tariffs on some imports. In direct effect of the lowered import tariffs, other countries also lowered their tariffs on their imports. In an effort to assure Americans that the banks would not be unable to give the customers their money, the Federal Deposit Insurance Corporation was created in 1933. This insured bank deposits so people would always be able to get at least some of their money back.
There were some Americans who were able to keep their jobs during the depression. People with money found the cost of living during the depression to be much less than in the 20s. For example the cost of a pound of steak was 29 cents and gas was only 18 cents a gallon.
Roosevelt's “New Deal” helped give the country the confidence it needed to get their feet back on the ground. But in 1940 about 15 percent of America's working force did not have jobs. It wasn't until 1942 when World War 2 erupted that the depression could be called over. The demand for war products opened up many jobs for the unemployed. In 1944 the unemployment rate was at only 1 percent. Some say the war was a horrible event in time, but for America it ended a depression that could have lasted for much longer.
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