Gabrielle Labourier Extended Essay
How did governments deal with problems caused by the great depression? Were they effective?
The Great Depression was a period of economic depression that affected most of the industrialized world between 1929 and 1939. It was the longest and most severe depression that the Western world had ever faced and was jump started by the Wall Street Crash of October 1929. This stock market crash caused a financial crisis that plunged the world into the Great Depression for around ten years, affecting millions of people all over the globe. The results of this depression were terrible, with tens of millions left unemployed, starving and poor regardless of their previous wealth and this common misery led to solid ground for extremist politics such as communism and fascism to build on and exploit.
In 1929, when the crash occurred, the United States of America were under the control of the republican president Herbert Hoover and this until 1933. At this time after the war, the USA were still a very strong economy, and the rest of the world depended on its strength for its success. When the crisis started, prices of raw materials dropped and markets all over the world began to collapse and matters were made worse when the USA withdrew their loans previously accorded to various countries thus extending the crisis to a global level. President Hoover tried to reassure the people that the crisis wouldn’t last, that “prosperity is just around the corner” which some believed. Even when matters became worse he didn’t act much on it. Being a republican, he believed that if you were in trouble you should not rely on anyone but yourself and that you shouldn’t count on others helping you, he had very individualistic ideas. This meant he did not particularly try to help those who were unemployed as he claims this was not the government’s job to do so. His politics weren’t all bad, he spent money to have the Hoover Dam built, which did create some jobs and in 1932 when unemployment was around 20% of the working age population he did give out some money to states but even this had very little impact because the Republican states also believed in individualism (even more than Hoover did) and therefore only spent about 10% of the money on jobs and solutions for the unemployed. The USA were also affected by the European situation as they needed their loans back and so in 1931, the president introduced the Hoover Moratorium. This was to postpone all collection of debts for a year in hope that it would help the situation. This policy was very last minute and the move was in fact too late as all German banks collapsed in July. Hoover’s last efforts to save the crisis had failed. In 1932, the new elections occurred, and Hoover was defeated by the democrat candidate Franklin Delano Roosevelt who had promised the Americans a “New...