1 Your Name: Instructor’s Name: Class Information: Date: Great Depression of the American Economy Great Depression was an austerely down trend in the economic activity of the world in the decade foregoing World War II.  The time duration or rather the time for the Great Depression Was not fixed. It varied from countries to countries. However, in many countries it was experienced in the year 1930 and it lasted till the midst of 1940. The time duration for the Great Depression was for a longer period of time and it was considered the longest as well as the deepest depression of the twentieth century The beginning point of the Depression was the fall or the crash in the stock market in U.S. The fall in the prices of stock began in the year 1929 on 4th September and the stock market crashed on the 29th of October in the year 1929. This day was known as the Black Tuesday.  The Great Depression affected severely all the sections and the class of the society in the countries including the rich and the poor. Profit Margin and the prices of the goods and services severely dropped and if the amount of revenue and taxes collected also had a devastating fall which had severe negative effect on the economy. The level of Unemployment rose in U.S. and it was depicted that around twenty percent of unemployment rate increased in U.S. whereas, in other countries the level of Unemployment rose to thirty three percent which was the highest ever increase in the rate of the unemployment process. All the cities around the world were suffering due to this depression and especially those cities or countries whose backbone was heavy industry, construction industries because this industry totally turned downed and halted in various countries. Due to the depression the agriculture sector was also effected as because the prices of the crop also fell to around sixty percent. Due to unemployment the primary sector was also affected, activities such as mining, logging and cash cropping was effected a lot.   There were various causes for the depression in the year 1929. These comprised of the primary weaknesses and definite events that led to a major depression and the way in which the severe depression profused from country to country was simply devastating. According to the historians the main cause or the real reason behind the great depression was failure of the bank and the crash or the fall of the stock market. However, the various monetarist economist such as Milton Friedman, Peter Temin and Barry Eichengreen states that the major cause behind the depression was the inappropriate action considered or adopted by the US Federal Reserve and the limited supply of the money and the decision of Britain for returning of gold standard before the World War. The activity of business and the period of Boom and depression in the business and recession are considered or rather regarded as the normal activity for the business and are considered normal. However, what are t.

1. 1
Your Name:
Instructor’s Name:
Class Information:
Date:
Great Depression of the American Economy
Great Depression was an austerely down trend in the economic
activity of the world in the decade foregoing World War II. The
time duration or rather the time for the Great Depression Was
not fixed. It varied from countries to countries. However, in
many countries it was experienced in the year 1930 and it lasted
till the midst of 1940. The time duration for the Great
Depression was for a longer period of time and it was
considered the longest as well as the deepest depression of the
twentieth century
The beginning point of the Depression was the fall or the crash
in the stock market in U.S. The fall in the prices of stock began
in the year 1929 on 4th September and the stock market crashed
on the 29th of October in the year 1929. This day was known as
the Black Tuesday.
The Great Depression affected severely all the sections and the
class of the society in the countries including the rich and the
poor. Profit Margin and the prices of the goods and services
severely dropped and if the amount of revenue and taxes
collected also had a devastating fall which had severe negative
effect on the economy. The level of Unemployment rose in U.S.
and it was depicted that around twenty percent of
unemployment rate increased in U.S. whereas, in other countries
the level of Unemployment rose to thirty three percent which
was the highest ever increase in the rate of the unemployment
process.
All the cities around the world were suffering due to this

2. depression and especially those cities or countries whose
backbone was heavy industry, construction industries because
this industry totally turned downed and halted in various
countries. Due to the depression the agriculture sector was also
effected as because the prices of the crop also fell to around
sixty percent.
Due to unemployment the primary sector was also affected,
activities such as mining, logging and cash cropping was
effected a lot.
There were various causes for the depression in the year 1929.
These comprised of the primary weaknesses and definite events
that led to a major depression and the way in which the severe
depression profused from country to country was simply
devastating. According to the historians the main cause or the
real reason behind the great depression was failure of the bank
and the crash or the fall of the stock market. However, the
various monetarist economist such as Milton Friedman, Peter
Temin and Barry Eichengreen states that the major cause behind
the depression was the inappropriate action considered or
adopted by the US Federal Reserve and the limited supply of the
money and the decision of Britain for returning of gold standard
before the World War.
The activity of business and the period of Boom and depression
in the business and recession are considered or rather regarded
as the normal activity for the business and are considered
normal. However, what are the actual causes behind the
depression or which turns the normal problem to great
depression is a serious matter of concern. Scholars have not
accepted the causes of the great depression given by the
historians and the economists. The search for causes is deeply
related to the issue of ignoring the future depressions.
Most of the monetarists believe that the Great Depression began
just like an ordinary recession, but however the compelling
policy mistakes by monetary authorities basically by the Federal
Reserve had a great effect and it worked like oil in fire. It led to
limited supply of money in the market and economically

3. effected the situation and resulted into great depression from a
small recession.
The British economist John Maynard Keynes stated that the
cause behind the great depression is low expenditure. He stated
that the low expenditure in the economy resulted into massive
or great decline or reduction in the income level and which
further resulted into the down fall of Unemployment level. At
t hat moment the economy of the country recorded the lowest
economic activity and high level of Unemployment.
However, one more economist Keynes stated that if the
government would have taken the proper or appropriate steps of
reducing or cutting off the taxes and increased it spending than
the recession would have not turned into the Great Depression.
The private sector will not take any initiative in providing the
employment and would enable to run the production at a normal
rate.
Many economists have even stated that have argued that the
acute fall or decline in international trade after the year 1930
assisted or rather helped in worsening of the depression,
especially for those countries which were basically dependent
upon the foreign trade. Many historians and economists partly
held the American Smooth -Hawley Tariff Act responsible for
worsening the depression because it led to reduction in the
international trade and caused retaliatory tariffs in other
countries.
In dollar terms, the export of America reduce or rather
declined to about $5.2 billion in the year 1929 t compared to
$1.7 billion in 1933; but prices had also fallen down so the
volume of exports only fell by half. The severe effect was upon
the farming sector as because various crops such as wheat,
tobacco, cotton and lumber. The collapse of farm exports led to
many American farmers to default on their loan and resulted
into great depression.
The other factor leading to the great depression was over
indebtedness and deflation. Because of the over indebtedness
and deflation the other activities which followed were fall in the

4. profit level, fall in the level of asset prices as well as in the net
worth of the business and reduction or fall in the value of the
output, trade and in employment and hoarding of money. It also
resulted in the fall of the nominal rate of interest.
The great depression was a very big and the deepest economic
crisis of the world. It has lasted for a longer period of time due
to various reason but the first and the foremost reason is that
the government didn’t took any steps or initiatives to restore the
economy. So, the level of the unemployment rose to a very high
level. The private sector didn’t take any care or importance
towards the stabilization of the economy.
The crash of the stock market in U.S. has also affected Wall
Street and various investors were affected and it had severe
effect on them. It has resulted in down trend and failures of
various Bank and unemployment amongst the people. Franklin
D Roosevelt helped in reducing the bad or adverse effect in the
1930.
So if the government would have taken the proper initiative to
restore the depression than the recession would have never
changed into the great depression and it would have not lasted
for the long period.

5. References:
1. Garraty. A. Johny. “ The Great Depression “, 1986.
2. Cochrane Willard W. “ Farm Prices Myth and Reality”, 1958,
p-15.
3. Hamilton James, “ Monetary Factors in the Great
Depression”, 1999.
4. Schultz, Stanley K, “ Crashing Hopes: The Great
Depression”, 1999.
5. Kehoe, Timothy J, Prescott, Edward C, “ Great Depression of
the Twentieth Century”, 2007.
6. Murray Roth bard, “ America’s Great Depression “, 2000. P
159-163.
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