Great depression

The Grande Depression is the period of the American history which followed the Black Thursday of the October 24th 1929, day when occurred the stock exchange crash (the stockmarkets New Yorkean crumbled in a durable way on Monday, October 28, 1929 it black Monday). The events of this day started a world Economic crisis which led to the Déflation and with a significant increase in Chômage.

History

After the Black Thursday, with the the United States, the president Herbert Hoover, tried without much success to cure the crisis. One of the principal problems was that with deflation, the same amount of money made it possible progressively to acquire more and more goods of the fall of the prices. Its adversaries Démocrate S called it the “ Do nothing ”. Another problem was that there had been no monitoring of the stockmarkets, and that at the time of the slump in prices, much of actions and capital spending programs proved to be insolvent, even fraudulent. Unfortunately, of many banks their capital in these doubtful businesses had put, which involved the collapse of the banking system, in 1932. With the failure of the banking system, and the population clinging to little currency which it still had, it did not remain enough of liquidities on the market so that any economic activity can reverse the tendency.

As the US banks then have interests in many European banks and that they repatriate their assets in the United States urgently, by a phenomenon of cascade, the crisis is propagated in all Europe, more tardily seems T it in France (at the end of 1930?) but certain historians call into question this assumption. In Germany, unemployment rate will reach tops (more than 25% of the active population in 1932), feeding the disillusion and the anger of the population, and it is by promising to regulate the problem of the crisis that Adolf Hitler arrived at the capacity (January 30th, 1933). In South America, in Asia and Africa, occurs the “crisis of the products of dessert” related to the strong fall of the purchasing power in Europe and North America. In Brazil, to limit the price-cutting and to make climb the courses, the coffee is burned in the engines. The France and the the United Kingdom try to be folded up on their Colonies, developing the “imperial preference”, prohibited at the time of the Conférence of Berlin (1885) but largely practiced after 1914. The whole world is touched except the Soviet Union of Stalin, protected by his autarkical economic system.

In November 1932, the the United States élirent Franklin Delano Roosevelt to replace Hoover with the head of the State. With an unemployment rate approaching the 25% of the active population, Roosevelt which takes its functions in March 1933 launched several national plans in order to increase the volume of liquidities and to reduce unemployment (it is what one named the New Deal). The supreme court was opposed initially to this economic Interventionnisme very extremely, opposite with its preceding jurisprudence, before joining there in 1937, by the stop West Coast Hotel Co. v. Parrish. New Deal is often credited to have made it possible to overcome the crisis. This point of view is disputed, in particular by the classical economists, especially starting from the Années 1960. It in any case made it possible to limit the dramatic social consequences of the crisis, described by works like the Grapes of anger , or Of the mice and the men . It also provides to the the United States infrastructures - roads, hydroelectric installations - still used at present. It gives again hope with the Americans and Roosevelt will be re-elected into 1936,1940 and 1944, in the context of the war it is true for 1944. By the first strong intervention of a State in the economy, some even think that it saved the Capitalisme itself.

Since the the United States were still in full crisis when occurred the Second world war, it is difficult to come to a conclusion in a reliable way about the success which the New Deal had on the US economy. The debate remains open. Some affirm that the inherent instability of the economic markets caused a so major crisis, that even the interventions of the New Deal, so relevant are, could not have restored the situation quickly. Others estimate that, the crisis of 1929 corresponding to the period of the American history where the intervention of the government was strongest, one could reasonably think that the action of the government made only accentuate the depression, rather than to cure it. They draw inter alia arguments owing to the fact that after an initial rectification, the economy replongé starting from 1936, about at the time when the Supreme court allowed the New Deal to become more extensive.

Many thinks that they are the expenditure of war of the governments which started again the world economic growth, but in fact, this assertion is only with true half. The Germany and the Italy had left the crisis before the Second world war while launching out in massive expenditure in infrastructure and armament. The the United States returned ata normal activity ratio during the war thanks to the important military investments, but also by employing a big part of the active population in the army. Although this situation was dictated by the events, that did not mean - on the contrary - that America had left the crisis. And when the war came to a end, the return of the million soldiers in their hearths imposed one period of readjustment of the economy. It is this transition which the G.I was supposed to facilitate. Bill . In other countries, such as the France, the Great Britain or the Netherlands, the war had of course caused considerable damage, rather than to be an engine of the economic revival. If the war could prove to be advantageous for certain sectors of the economy, it generally caused an economic and social dislocation such as it thwarted least its positive effects. On the other hand, the disagreement between the States on the financial and economic payments of the crisis is a factor favorable to the blossoming of the fold on oneself of the capitalist States.

Causes

Many a economists thinks that the Great Depression was at the same time caused and prolonged by the attitude of the US government. Although the event release of the crisis is perhaps not due to an action of the government, much estimate that the incorrect economic policy transformed what should have been a momentary Krach in an economic crisis which lasted one decade. Two policies were particularly shown finger by the economists:

the first is the monetary policy of the American Federal fund, which restricted the quantity of currency on the market, after having let it extend in a doubtful way (in particular with the passage from the gold standard " gold exchange" with the " gold standard exchange" consisting in not adjusting gold stocks of the central banks with the currencies leaving the countries, while at the same time at the conclusion of lère world war of the immense capital regained Europe),
the second is the recourse to protectionist measurements such as the Hawley-Smoot Tariff Act, which increased the tariffs with the importation in the aim of protection the local producers endangered by international competition. In answer to this policy, other countries increased in their turn their tariffs, putting in very bad posture the american companies which lived export. What led to a succession of increases in the tariffs which split up the worldwide economy.

The blindness of the economic actors is rather remarkable. Although the growth rate of the GDP was null from January to August, the president of the Stock Exchange of Wall Street expresses himself thus (September 1929): “Many people did not understand that it is apparently finished business cycles such as we knew them. As for me, I am convinced of essential and fundamental solidity of American prosperity. ”…

The rise of interest rates in Great Britain seems to have had a psychological effect on optimism of the brokers and the brokers of the various Stock Exchanges, which could also have been a cause of the crash.

Great depression

History

Causes

See also

Internal bonds

External bonds