Federal Reserve System And The Great Depression

972 words - 4 pages

FlemingJordan FlemingMr. Alex Blumenstock07 October 14ENGL 1010The Federal Reserve System and the Great DepressionThe Federal Reserve System impacted many major economic situations of the United States during the 20th and 21st centuries. One example of this impact occurred during the Great Depression of the 1930's. This paper will analyze how the Federal Reserve System stimulated the creation, continuation, and end of the Great Depression.The Great Depression was a global economic crisis that started in 1929 and lasted until 1941, upon entry to World War II. In United States history, no other depression provoked such traumatic repercussions. The Great Depression sparked on October 9, 1929, or "Black Tuesday." On "Black Tuesday" the bottom dropped out of the stock market on some bad economic news from Britain; consequently, stock prices plummeted and stockholders lost $40 billion in value by the end of 1929.However, according to ABC-CLIO, "the crash of the New York Stock Exchange on October 29, 1929 was a symptom rather than a cause of the depression" ("Great Depression"). The stock crash was only a trigger, the causes of the Great Depression lied deeper within. Over speculation (in stock) and over production (in farms and factories), in the 1920's, resulted in production and consumerism over-reaching the consumer's ability to buy things using real money. As a result, the stock crash was triggered which lead to a cycle of devastating events. Businesses began to go out of business, unemployment rates skyrocketed, and over 5,000 banks went bankrupt as individuals withdrew their money in fear of bankruptcy. However, the Great Depression did not only affect the United States, it went international. According to ABC-CLIO, "the crash also brought an end to the loans that the United States had extended to European countries, which were still recovering from World War I. Europe slipped further into decline and lost any economic gains made in the 10 years since the end of the war" ("Great Depression"). Additionally, many Latin American and Asian countries' economies crashed in response to the loss of their trade markets, and even some governments fell as a result of the crisis.Like most presidents in bad economic times, Hoover took the blame. Although this was unfair, his ideas and action did not help himself. His individualist nature made him slow to take government action, and his analysis that the Great Depression was only a natural part of the business cycle, ups and downs of the economy, disappointed the people. According to PBS, "Hoover was widely ridiculed: an empty pocket turned inside out was called a 'Hoover flag;' the decrepit shantytowns springing up around the country were called 'Hoovervilles'" ("General Article: The Great Depression"). In 1932, Franklin Delano Roosevelt would win the election by a landslide. Roosevelt took quick action, he declared a four-day bank holiday, to pass the Emergency Banking Relief; according to PBS, "during the...

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