The Great Depression was a landmark event in the history of the United States that also influenced the flow of the global history. Starting with Black Thursday (October 24, 1929) and the Stock Market Crash, the Great Depression unravelled with such events as the increase of unemployment rates, farmers losing their farms, droughts (both financial and environmental), and acute currency deflation. Despite the fact that the Great Depression is considered an event of the ‘dark’ past, it is essential to learn from mistakes and understand what measures can be taken to prevent similar incidents from occurring today.
Causes of the Great Depression
Fundamental causes of the Great Depression included the Stock Market Crash, bank failures, reduction of purchasing, drought conditions, as well as policies existing between Europe and the United States (Shi & Tindall 2016). While Black Thursday was neither the first market crash nor was it the largest, it is considered the cause because it led to a massive public panic due to the market’s plunge at its opening on October 24, 1929.
As citizens’ investments became worthless and their savings came to an end, the purchasing power significantly dropped and thus made the economy weaker and more susceptible to crises. Such measures as the Smoot-Hawley Tariff, which imposed sky-high taxes on imported goods, inhibited the world trade and worsened the economy (Beaudreau 2005). Lastly, environmental conditions also contributed to the poor economic climate; the drought led to the exhaustion of farming, which killed livestock and crops, leaving farmers jobless. Therefore, the Great Depression was a complex event that had many causes.
Effects of the Great Depression
As the American government learned from its mistakes, it began acting to overcome the Depression and improve the economy. Results of the Great Depression include such improvements as the stock market and banking regulations, Roosevelt’s initiative to support the Congress and the FDR with subsidies and services to recover the economy, the increase of government’s role in citizens’ lives, the mass migration to urban areas, as well as the societal change (people being frugal, not believing banks and the stock market) (Barber 1997).
How to Prevent the Great Depression from Occurring Today
Among the critical problems that the 1930’s government had to overcome was the high vulnerability of the society and the bank system. This means that the prevention of financial panic, mass unemployment, and the fall of the economy can be prevented through the strengthening of the financial sector’s position and the encouragement of the society to stay away from personal debt (Kraft 2013). Similarly to the mass consumerism of the Roaring Twenties, modern customers are used to spending a lot of money on products they do not need (Page 1992). Consumerism is a phenomenon that explains chronic purchasing of new goods advertised by large corporations; however, such purchasing usually inhibits the society’s view on what products are necessities and are healthy choices for them (Healey 2007).
It can be concluded that unhealthy consumerism is among key problems that weaken the economy and make the society vulnerable to crises and instabilities. To avoid the Great Depression today, the global society should reconsider its views on purchasing unnecessary goods that strengthen large corporations but limit abilities of people to withstand the financial pressure at times of an economic downfall.
Barber, W 1997, ‘FDR’s big government legacy’, Regional Review, vol. 7, pp. 1-5.
Beaudreau, B 2005, Making sense of Smoot-Hawley: technology and tariffs, iUniverse, Lincoln.
Healey, J 2007, Consumerism, Spinney Press, Thirroul.
Kraft, M 2013, The Great Depression of 1929: overview of causes and effects on America, CreateSpace Independent Publishing Platform, North Charleston, SA.
Page, C 1992, ‘A history of conspicuous consumption’, in FW Rudmin & M Richins (eds), SV – meaning, measure, and mortality of materialism, Association for Consumer Research, Provo, UT, pp. 82-87.
Shi, E & Tindall, G 2016, America: a narrative history, W.W. Norton & Company, New York, NY.