The impact of the Great Depression was more profound than any other economic downturn in history. This economic depression started with a fall in the prices of agricultural products: first in the price of lumber (1928), mainly due to competition from Soviet lumber; but a greater disaster came in 1929, with an excess of Canadian wheat. production, the United States forced down the prices of basic grains in all agricultural production areas. Whether in Europe, the Americas or Australia, the agricultural recession was further exacerbated by the Great Financial Collapse, especially in the United States, where a speculative fever led to the withdrawal of large amounts of capital from Europe, followed by the panic of the Wall Street stock market crash in October 1929. . 1931 French bankers Crowded Wall Street on Black Thursday (1929)

The loan to the Austrian bank was called in, but this was not enough to repay the debt. The disaster bankrupted the institutions of many countries in Central and Eastern Europe: it led German bankers to defer foreign debt repayments in order to protect themselves, and in turn endangered British bankers with large investments in Germany. The shortage of capital has brought about a sharp decline in exports and domestic consumption in all industrialized countries: no market will inevitably cause factories to close, and the less goods there are, the less goods will be transported, which will inevitably harm the shipping industry and shipbuilding. Industry. In all countries, the consequences of the recession were mass unemployment: 13.7 million in the United States, 5.6 million in Germany, and 2.8 million in the United Kingdom (maximum figures for 1932). The Great Depression also had a major impact on Latin America, causing a loss of foreign investment and commodity exports in a region that was almost completely dominated by European and American bankers and merchant entrepreneurs.

Edit this paragraph The Great Recession

Causes

The Great Recession (1929-1933), people waiting for relief (Roosevelt Memorial Hall, Washington)< /p>

There are various business cycle theories in the economics community. When analyzing the causes of the Great Depression, there are different opinions and no consensus. [1] Perhaps the best explanation of the cause of the depression is that the decrease in expenditure of one or several social groups exceeds the increase in expenditure of other social groups. In 1929, consumers purchased 72% of the gross national product, businessmen invested and consumed 18%, federal, state, and local governments in the United States used slightly less than 10%, and the remainder was exported. In 1929-1930, GNP spending fell by about $14 billion as investors and consumers reduced spending by about $15 billion. Although government spending increased slightly, the impact was insignificant. Reflecting the decrease in investment and consumer spending, layoffs and unemployment in the labor market increased, and business and industrial sales and profits fell. Based on the above analysis, it can be seen that as long as we find out the reasons for the decrease in consumer spending and business investment, we can determine the cause of the Great Recession. Through historical analysis, it can be clearly seen that in the 1920s, there were already several trends that were ignored or ignored by people that were not conducive to economic development. Agriculture never fully recovered from the postwar depression, and farmers remained poor throughout this period. In addition, many of the so-called higher wage levels in the industrial sector are false. Within this decade, the introduction of new machines displaced large numbers of workers. For example, between 1920 and 1929, the total industrial output value increased by almost 50%, but the number of industrial workers did not increase, and the number of employees in the transportation industry actually decreased. Service industries, where wages are very low, have seen the largest increase in workers, which undoubtedly includes many skilled workers who have lost their jobs due to technological advancement. So statistics that show a slight increase in wages do not appear to reflect the true situation. Since workers and peasants are the basic consumers, economic difficulties encountered by these two groups of people will definitely have an impact on the consumer goods market. Unemployment surged in the United States during the Great Depression

Under these circumstances, the expansion of advertising and the increase in installment credit sales in the 1920s had undesirable consequences. Installment credit sales strive to expand the consumer goods market. From 1924 to 1929, installment sales increased from approximately US$2 billion to US$3.5 billion, which shows that the growth rate is astonishing. There is no doubt that the use of installment credit sales has increased the sales of durable consumer goods such as cars, radios, furniture, and household electrical appliances. However, the promotion of the installment sales method also shows the fact that without increasing loans, the consumer goods market cannot accommodate the large number of products produced by the industrial sector. Moreover, from an economic point of view, this method of selling loans itself carries certain risks; as long as consumer credit, that is, installment credit sales, is reduced, consumer purchases are likely to decrease. It seems that this happened in 1929. The expansion of industrial production in the 1920s was due to the huge investment in new factories and new equipment. This investment has enabled the employment of a large number of workers in relevant sectors such as construction, machine tool manufacturing, and the steel industry. Therefore, as soon as capital expenditure or investment decreases, workers in various production sectors will lose their jobs in large numbers. By 1929, the consumer goods market could no longer accommodate the increased production of goods, and there was no longer a need to expand factories and equipment. For example, it is estimated that in 1929, the operating rate of the entire American industry was only 80%. Under these conditions, it is no wonder that investment (in 1958 dollars) fell from $40.4 billion in 1929 to $27.4 billion in 1930, and then to $4.7 billion in 1932. .

The reduction in investment has led to the bankruptcy of enterprises producing means of production and the unemployment of workers. The problem is exacerbated by the decline in housing construction. Housing construction reached its peak in 1925 and then declined. Only 500,000 houses were built in 1929 (compared to about 1 million in 1925). After 1927, the automobile industry also declined sharply. The unemployment of workers in the production sector of means of production will reduce the sales of consumer goods, thus leading to the unemployment of workers in the consumer goods production sector. The reduction in sales of consumer goods, in turn, further reduces investment. The intensifying interaction between these two major sectors drives production to decline and unemployment to rise. Even favorable factors such as low taxes and high profits may have contributed to the crisis itself. It now appears that most of the increased income during that period went into the pockets of a few individuals or families. A paper published by the Brookings Institution in 1934 studying the economic issues of the 1920s stated: "The slums where the poor lived in the United States during the Great Depression

"The United States has shown an increasingly unequal distribution of income. The trend, at least around the 1920s, is that the income of the people has increased during this period, and the income level of the upper class has increased faster. The saving part is increasing faster than the consumption part, and there is a tendency for the rich and their families to invest more and more of their accumulated income.” From an economic point of view, the distribution of income in the 1920s was due to tightening of consumption. The tendency to increase investment. Looking back at this period of history, we can see that if consumers have more money on hand and investors have less money, the national economy may be more stable. The stock market boom of 1929, caused in part by bank credit, also reflected an excess of capital that made it unprofitable for capitalists to invest in the purchase and construction of factory equipment. The prosperity of the 1920s was mainly attributed to abundant natural resources, growth in industrial and agricultural production, technological progress, improvement in labor productivity, expansion of consumption and prosperity of foreign trade. However, the poverty of many Americans and certain weaknesses in the national economy contributed to the onset of the Great Depression. Still, until the late 1920s, most Americans were optimistic that the boom would continue.

After

Herbert Clark Hoover

The 1920s were called the "New Era", and wealth and opportunity seemed to be on the rise. The victorious Americans in World War I opened their own stingy doors. The entire society is eager for new technologies and new lifestyles, and "conspicuous consumption" has become the trend of the times. President Hoover also believed that "we are on the eve of a decisive victory in the war on poverty, and slums will disappear from the United States." On October 24, 1929, the United States ushered in its "Black Thursday" (the sudden plunge of the U.S. Wall Street stock market). On this day, the U.S. financial sector collapsed. Stocks fell from their peak to the abyss overnight. Prices fell so fast that even the automatic stock market monitor could not keep up. October 29, 1929 was a Tuesday, and the New York stock market plummeted to its peak on that day, so some people also use "Black Tuesday" to refer to this event. In just two weeks from October 29 to November 13, 1929, US$30 billion in wealth disappeared, equivalent to the total expenditure of the United States in World War I. But the collapse of the US stock market was just the crater of a devastating economic crisis. There was a popular children's song in New York at the time: "Mellon pulled the whistle, Hoover rang the bell, Wall Street gave the signal and the country." went to hell) With the collapse of the stock market, the U.S. economy immediately fell into a devastating disaster. A terrible chain reaction quickly occurred: crazy runs, bank failures, factory closures, workers' unemployment, the advent of poverty, organized Resistance, the edge of civil war. Agricultural capitalists and large farmers destroyed "surplus" products in large quantities, used wheat and corn as fuel for coal, and poured milk into the Mississippi River, turning the river into a "Milky Way." The homeless in the city built simple shelters using wooden boards, old iron sheets, oilcloth and even brown paper. The villages where these huts gathered were called "Hoovervilles". The begging bags of homeless people are called "Hoover bags." The cars that are pulled by animal power because they cannot afford to buy fuel are called "Hoover cars." Even the newspapers covered by homeless people sleeping on street benches are also called "Hoover bags." Buddha blanket". The street apple vendor became one of the most familiar symbols of the Great Depression. Among those forced to make a living running fruit stands, many were formerly successful businessmen and bankers. The collapse of the stock market led to the Great Depression that lasted four years. This economic crisis quickly spread from the United States to other industrial countries. For millions of people, life has become a struggle for food, clothing and shelter. In order to safeguard their own national interests, various countries have strengthened trade protection measures and means, further exacerbating and deteriorating the world economic situation. This is an important root cause of the outbreak of World War II.

The Great Depression also caused serious social problems: During the Great Depression, about 2 to 4 million middle school students dropped out of school; many people could not endure the physical and psychological pain and committed suicide; and social security deteriorated day by day. The most important issue is unemployment. In the United States, the total number of unemployed people has reached 8.3 million. In cities across the United States, queues for poor people to receive relief food stretch for several blocks. In the UK, 5 to 7 million people are unemployed and have to wait in longer lines at the labor market. People who experienced the Great Depression had a change in their thinking. Workers woke up from the torpor of the 1920s and launched a militant strike. Liberals were attracted to the Soviet Union's prosperity and became Marxists. And conservatives, fearful of Bolshevism, increasingly turned to fascism. "Black Tuesday" On October 29, 1929, everyone on the New York Stock Exchange was caught in the vortex of selling stocks. The stock index plummeted an average of 40 percent from its previous high of 363, and thousands of Americans watched their life savings evaporate in a matter of days. This is the darkest day in the history of U.S. securities. It is the most influential and harmful economic event in U.S. history, and its impact has spread to Western countries and even the entire world. Since then, the United States and the world have entered a decade-long period of economic depression. Therefore, this day is regarded as a landmark event that started the Great Depression, and because it fell on a Tuesday, it was called "Black Tuesday."

Turnaround

Franklin Roosevelt

In early 1933, Franklin Roosevelt replaced the anxious Hoover and was elected as the first president of the United States. 32nd President. In response to the reality at that time and in compliance with the will of the broad masses of the people, he boldly implemented a series of policies and measures aimed at overcoming the crisis. This was historically known as the "Roosevelt New Deal". The main content of the New Deal can be summarized as the "Three R's". That is, Recover, Relief, and Reform. Because the Great Depression was triggered by a financial crisis caused by wild speculation. President Roosevelt's New Deal also started with financial consolidation. Among the 15 important pieces of legislation enacted during the period known as the "Hundred Days of New Deal" (March 9 to June 16, 1933), laws related to finance accounted for one-third. When Roosevelt was sworn in as president on March 4, 1933, almost no banks in the country were open and checks could no longer be cashed in Washington. At Roosevelt's request, the U.S. Congress passed the Emergency Banking Act on March 9, deciding to adopt an individual review and licensing system for banks, and to allow solvent banks to resume operations as soon as possible. From March 13 to 15, 14,771 banks have received licenses to reopen, compared with 25,568 banks before the crisis broke out in 1929, 10,797 banks were eliminated. The extraordinary measures taken by Roosevelt to rectify the financial system played a huge role in cleaning up the mess and stabilizing people's hearts. Public opinion commented that this action was like "a flash of lightning in the dark sky." While fixing the banks, Roosevelt also took actions to strengthen America's foreign economic position. Beginning with the announcement of a cessation of gold exports on March 10, 1933, major measures were taken one after another: on April 5, it was announced that private storage of gold and gold securities was prohibited, and U.S. banknotes were stopped convertible into gold; on April 19, gold exports were banned, and gold exports were abandoned. Gold standard; on June 5, public and private debts were abolished and paid in gold; on January 10, 1934, the issuance of US$3 billion in banknotes guaranteed by national securities was announced, devaluing the US dollar by 40.94%. The devaluation of the U.S. dollar strengthens the competitiveness of U.S. goods with foreign countries. These measures have played an important role in stabilizing the situation and easing the blood circulation of economic life. During the "Hundred Days of New Deal", while resolving the banking problem, Roosevelt also tried his best to urge Congress to pass the "Agricultural Adjustment Act" and the "National Industrial Recovery Act". These two laws became the right and left arms of the entire New Deal. Roosevelt required capitalists to abide by the rules of "fair competition" and set the scale, price, and sales scope of each enterprise's production; he set minimum wages and maximum working hours for workers, thereby limiting monopoly and reducing and easing class tensions. contradiction. After receiving reluctant support from large businesses, Roosevelt then tried his best to win the support of small and medium-sized business owners. He said that it is important for large companies to accept the Industrial Revitalization Act, "and the area that will produce fruitful results lies in small employers. Their contribution will be to provide new job opportunities for 1 to 10 people. These small employers are actually the backbone of the country." "The development of small and medium-sized enterprises has played a positive role in the stability of American society and the recovery of the economy." Another important part of the New Deal is relief work. In May 1933, Congress passed the Federal Emergency Relief Act and established the Federal Emergency Relief Administration, which quickly allocated various relief funds and materials to states. The next year, it changed the simple relief to "work-for-relief" to provide employment for the unemployed. Opportunities for public service maintain the self-reliance and self-esteem of the unemployed. In the early days of Roosevelt's administration, more than 17 million unemployed people and their relatives in the country relied on help and charity from state and municipal governments and private charities to make ends meet. But this part of the financial resources is nothing compared to such a huge army of unemployed people. Only the federal government can solve this complex social problem.

The first measure of Roosevelt's New Deal was to urge Congress to pass the Civilian Conservation Corps plan. This plan specifically recruits young people aged 18 to 25 who are strong and have high unemployment to engage in tree planting and forest protection, flood prevention and control, soil and water conservation, road construction, opening of forest fire lines and setting up forest watchtowers. The first batch 250,000 people were recruited to work in 1,500 camps throughout the states. Before the United States entered the war, more than 2 million young people worked in this organization. They opened up more than 7.4 million acres of state-owned forest areas and a large number of state-owned parks. On average, each person works for 9 months per term, and most of the monthly salary is used for family support. This expands the scope of relief and the corresponding purchasing power in the entire society. For the millions of people who rely on states and cities for support, Roosevelt also urged Congress to pass the Federal Emergency Relief Act, establish a federal relief agency, reasonably divide the use ratio between the federal government and states, and formulate preferential policies to encourage local governments to use direct relief The poor and unemployed. During the New Deal, there were a wide variety of work relief agencies throughout the United States, which can be divided into two major systems: the Public Works Administration (the government has allocated more than 4 billion US dollars) and the Civilian Works Agency, which mainly engages in long-term project projects. Engineering Department (investing nearly US$1 billion), which has built 180,000 small engineering projects nationwide, including school buildings, bridges, embankments, sewer systems, and public buildings such as post offices and administrative offices, and has attracted It has provided jobs for 4 million people and found a place for the vast number of unskilled unemployed workers. Later, several new relief agencies were established. The most famous among them are the Works Construction Administration, which was established with US$5 billion allocated by Congress, and the National Youth Administration, which specifically targets young people. The two employ a total of 23 million people, accounting for more than half of the national labor force. By the eve of World War II, the federal government had spent $18 billion on various projects and smaller amounts of direct relief, with which the U.S. government had built nearly 1,000 airports, more than 12,000 sports fields, and more than 800 school buildings and schools. The hospital not only created jobs for craftsmen, unskilled workers, and the construction industry, but also provided jobs of all kinds to thousands of unemployed artists. It was by far the most ambitious and successful relief program undertaken by the U.S. government. This money passes through workers' pockets, through different channels and consumption, and then returns to the hands of capitalists, becoming the "inducing water" that stimulates private consumption and individual investment through government investment. The second phase of the "New Deal" that began in 1935, based on the first phase, focused on passing regulations such as the Social Security Act, the National Labor Relations Act, and the Public Utilities Act to consolidate the achievements of the New Deal in the form of legislation. Roosevelt believed that a government “that cannot care for the old and the sick, cannot provide jobs for the strong, cannot inject young people into the industrial system, and allows the shadow of insecurity to hang over every family, is not a government that can survive, or is the government that should exist," and Social Security should be responsible for the entire life "from cradle to grave." To this end, the "Social Insurance Law" was enacted. The law stipulates that all retired wage earners who are over 65 years old can receive a monthly pension of US$10 to US$85 according to different salary levels. Regarding unemployment insurance, Roosevelt explained: "Not only will it help individuals avoid relying on benefits when they are laid off in the future, but it will also cushion the impact of economic hardship by maintaining purchasing power." The source of insurance benefits is half provided by employed workers. The employer and the employer each pay an insurance premium equivalent to 1% of the worker's salary, and the other half is allocated by the federal government. This social insurance law reflects the strong desire of the working people and is welcomed and praised by the vast majority of people in the United States. On May 24, 1937, Roosevelt submitted a widely noticed message to Congress regarding minimum wage and maximum working hours legislation. The speech acknowledged that "one-third of our country's population, the vast majority of whom are engaged in agriculture or industry, are not well fed, poorly clothed, and poorly housed"; "We must bear in mind that our goal is to improve, not reduce, those who are now malnourished. , the living standards of those who are poorly clothed and poorly housed. We know that overtime and low wages cannot raise national income when a large proportion of our workers are unemployed." By Congress. No action was taken on the bill, and Roosevelt reintroduced it on October 12, 1937, until it was passed on June 14, 1938. This is the Fair Labor Standards Act (also known as the Wage and Hour Act). Its main provisions include a 40-hour work week and a minimum wage of 40 cents an hour; the prohibition of the use of child labor under the age of 16 and the prohibition of use in hazardous industries Workers under 18 years of age. The regulations on minimum wages will be adjusted gradually in the future with the development of the economy. Although these social legislations belong to the category of social reform, they are of great benefit to the people, especially wage earners. In order to solve the problem of federal funding sources for the Social Security system, Roosevelt implemented an unprecedented progressive tax based on the amount of income and assets. 31% is levied on net income of US$50,000 and inheritance of US$40,000, and 75% is levied on inheritances of more than US$5 million; corporate tax used to be 13.75%. According to the 1935 tax law, the tax rate for corporate income below US$50,000 was reduced to 12.5%, and the increase is 15% for those above US$50,000. By 1939, the New Deal implemented by President Roosevelt had achieved great success.

The New Deal involves almost every aspect of the socio-economic life of the United States. Most of the measures are specific considerations for the United States to escape from the crisis and minimize the consequences of the crisis. Others are long-term plans based on the long-term development goals of capitalism. Its direct effect is It prevented the United States from a major economic collapse and helped the United States get out of the crisis. Since 1935, almost all economic indicators in the United States have steadily recovered. The gross national product has increased from US$74.2 billion in 1933 to US$204.9 billion in 1939. The number of unemployed people has dropped from 17 million to 8 million, restoring national trust. Confidence in the national system freed the United States from the threat of fascism to the democratic system, prevented the United States in crisis from violent social unrest, created a favorable environment and conditions for the United States to participate in the anti-fascist war, and to a large extent determined the future of the United States. The direction of social and economic development in the United States after World War II. It is true that the ultimate goal of Roosevelt's "New Deal" measures was to strengthen state capitalism in order to overcome the economic crisis and consolidate the capitalist system. The "New Deal" was an experimental treatment he tried to treat the diseases of capitalist society when conventional treatments failed. In fact, some measures of the "New Deal" also had shortcomings, which often became the reason for his political opponents to launch attacks. Classes whose interests were harmed during the implementation of the "New Deal" also resisted and slandered them. Even the Industrial Recovery Act and two other bills, which were an important part of the early New Deal, were ruled unconstitutional by the Supreme Court two years later. However, as long as we truly look at the "New Deal" with a historical materialist attitude, it is not difficult to see that the "New Deal" accurately grasped the pulse of American economic and social life, "enabling people to return to work and enabling our businesses to become active again." "The slogan is in line with the interests of the working people and fully arouses their enthusiasm. Roosevelt regarded it as the government's responsibility to maintain the normal operation of the national economy and ensure the employment of citizens. In particular, a large number of engineering projects built in the form of work relief not only greatly alleviated unemployment difficulties and stimulated the early recovery of the economy, but also built many infrastructure projects. Benefit the U.S. economy immensely. The New Deal left behind a large number of measures and policies to prevent the recurrence of the Great Depression, laying a solid foundation for the United States to enter World War II and its rapid post-war rise. As a result, Roosevelt became the most popular person in the United States and the world since Abraham Lincoln. President will forever be remembered in history.

Impact

The general impact of the Great Depression led to: 1. Increased government participation in economic policy, that is, Keynesianism; 2. Strengthened economic nationalism in the form of tariffs ism; 3. Stimulated the romantic-totalitarian political movement (such as the German Nazis) as an alternative to communism. The Great Depression, more than any other single cause, explains the gradual rightward shift in politics across continental Europe and Latin America between 1932 and 1938. 4. The rise of dictators such as Adolf Hitler and Benito Mussolini indirectly caused the outbreak of World War II.

Life