Question

The Great Depression of the 1930s was our nation’s most serious economic crisis. Using specific examples, discuss the impact that the Depression had on American society, businesses, banks and people. (hint: see The Causes of the Great Depression and The Human Toll of the Depression).

Answer 1

The Great depression was the world's most severe downturn, which almost lasted for a decade, 1929 - 1939. The recession began in the United States with a crash in the stock markets. This Great depression witnessed large scale unemployment in addition to drastic decline in output and acute deflation. This was the worst hit recession in the industrialized western world, and got spread to other parts of the globe.

The impact of depression was large scale and in every aspect of life, from society to business and people. The impact on American society and people was that, with high rate of unemployment, exceeding about 20 percent, lives of common man was adversely affected. By 1933, nearly 13 million were out of work and the unemployment stood at 25 percent and the gross domestic product of United States fell by 30 percent. A social worker in Chicago wrote, “We saw Want and Despair walking the streets, and our friends, sensible, thrifty families, reduced to poverty." Falling prices for the produce/ crops, accompanied by the drought, made farmers the worst hit victims of the recession. A large scale migration was also an outcome of the recession, where people moved out in search of a better job and living. The "Dust Bowls" are a perfect example that reveals the situation. Thus, poverty and unemployment affected the masses on a large scale.

The impact on businesses and banks were such that by early 1933, about 5000 banks had gone out of business. On October 24, 1929, the shares of U.S markets fell by 40 percent. A share of US steel was sold for $22 in 1933 which was $262 before the crash. The disastrous Howley - Smoot tariff made the US international trade even worse. More than a third of nation's banks failed in three years from 1929, thus leading to loss in the savings of common people. The over production and deflation affected the business unit and forced them to the verge of closure.

The Great depression was not confined only to US but countries around the world was affected with this recession. Adding to the stock market crash, a weak banking system, industrial over production and already low prices for farm produce altogether made the recession the worst.