The Great Depression and Its Causes

There are a few specific reasons that are contributing factor for the Great Depression in USA after the World War I. The major causes of Great Depression are-

The Great Depression mainly started after the stock market crash in USA in the year of 1929. However it is started as a simple recession in the summer of 1929 and converted into a severe condition on a black Tuesday of 1929.In the October,1929 the share market started to decline and by 1932 the market crashed completely. The share values of the companies started to decrease. Lack of proper employment policies in the American economy was also another reason of Great depression as in 1930 there was almost 4.3 million unemployed in US and by 1933 the number touched the figure of 13 million(Pells & Romer, 2018).

After the share market crash in 1929, the industrial production was greatly hampered in US and the industrial production  declined by 47%. As a result, the gross domestic product (GDP) was also drastically downed by 30%. A downfall in GDP caused declination of the wholesale price index (almost 33% declination) and such decline was referred to as deflation(Pells & Romer, 2018). In addition to this, the increasing rate of unemployment also altered the buying capacity of the people in USA. The general price deflation was directly associated with the trade concern of the US economy.

Banking practices of USA had a major role in the Great depression of USA. The banking system of USA is greatly relied on the capital of their own.  After the great depression, people lost confidence on banking system and they started to withdraw all their money from the bank. Banks had only a few amount of money as cash and they must liquidate loans for increasing the cash amount. This process caused failure of the banks and the US had faced several incidents of banking panics throughout the great depression.

The Great Depression greatly affected the international economy and business and that resulted in end of the international gold standard. Before the great depression, many European countries had faced enhancement in the union membership and they had also introduced government pension schemes. These two trends were greatly increased due to the great depression. In addition, in many countries in the world, the financial market was substantially increased(Pells & Romer, 2018).

The New deal was introduced by Franklin D. Roosevelt in order to combat against the condition of Great Depression in USA.

The New Deal Policies and Their Impact

The first new deal was first introduced in 1933 and it was ended in 1934. In the first new deal the major legislations were The Agricultural Adjustment Act, The Civilian Conservation Act, The Federal Emergency Relief Act, The National Recovery Act,The Federal Deposit Insurance Corporation. The second phase of the New Deal was introduced in 1935 and lasted for 3years that is from 1935 to 1938. In the second new deal the major legislations were The Works Progress Administration (WPA), The Wagner Labour Relation Act, The Social Security Act, The Fair Labour Standards Act, and Resettlement Act. The Third New Deal was introduced in 1937 and in this there were United States Housing Act, Farm Tendency Act, and Farm Security Administration (Amadeo, 2018)

In the New Deal program, Roosevelt had founded various organizations in order to combat against the economic crisis. FDR established a Federal Security Agency in 1939 in order to maintain the social security, food and drug safety, and federal education funding. Other organizations that were found during the time of New Dealwere National Recovery Administration (NRA), Agricultural Adjustment Administration (AAA), Securities and Exchange Commission (SEC), Bureau of Reclamation(Hardman, 2018).

The monetary expansion and the currency devaluation were the important sources of recovery. However, the devaluation were unable to enhance the output directly and instead of this allowed the countries to enhance their money. In between 1933 and 1937, there was huge increase in money supply in USA. This monetary expansion was stimulated by decreasing the interest rate and by enhancing the availability of the credit. As a result, the chances of inflation occurred and it gave confidence to the borrower that they could have enough profit to cover up their loan payments. In addition to this, various federal programs like Work Progress Administration encouraged the recovery process by hiring unemployed persons in the government projects (Hardman, 2018).

Cold War was a term used to denote a state of geopolitical tension between The Eastern Bloc (comprised of Soviet Russia and its allies) and Western Bloc (comprised of United States of America and its allies) after the end of the Second World War. The conflict started in 1949 after United States started to strategically contain the expansion of Soviet Russia and communism in Europe and was characterized by proxy wars where none of the opposing sides were directly involved in the war but supported major regional wars in other countries in a bid to establish their control over the regions or destabilize the hold of the opposing side (Davis, 2015).

The Cold War and Its Tensions

Effect of Arms Race on the rise of cold war tensions

The arms race, also known as the nuclear arms race was a race towards nuclear supremacy that started between USA and Russia as well as their allies. In the arms race, both the eastern and western bloc started developing stockpiles of nuclear weapons, although none of them were used in warfare but was mainly done so to show off their nuclear might and dissuade the opponent side from engaging in a full scale attack. Development of the nuclear weapons however raised tensions on both sides as they feared that the opponent can launch a nuclear attack at any moment thereby further driving the attempt to develop more weapons. The situation reached a critical point after the Cuban crisis and both the sides being prepared for a ‘mutually assured destruction’. The end result was the creation of large quantities of nuclear weapons by USA and Russia (Augustine, 2017).

USA followed democratic ideologies while USSR (Soviet Russia) followed communist ideologies. These ideologies differed greatly, with one being focused on capitalist agendas and the other on socialist agendas and were opposite in nature. Due to this, none of the sides wanted the influence of the other in their territories and neighboring countries. The USA tried to contain the rise of Communism in its neighboring countries such as Cuba and Latin America, while Russia attempted to incorporate communism in Europe and Asia. This directly led to tensions between USA and USSR, both trying to destabilize each other’s presence in other countries, leading to several proxy wars such as the Vietnam War, Korean War and Afghan Conflict (Davis, 2015).

Due to the cold war, a general sense of hysteria developed in America, partly exacerbated by the national media and partly by the nuclear testing and espionage stories from both USA and USSR. This also caused significant security concerns in USA as the country was afraid of a Russian invasion or more likely an attack by Cuba with Russian backup. The Cuban missile crisis greatly added to that fear in America. The Communist fear in America also led to organizations being discriminated for their left wing politics often attracting serious allegations of being Russian spies (Barnhisel, 2015).

Legislative Changes:

The Gay Rights Movement took place in USA and started during the 1960’s and 70’s. The movement resulted in several legislative changes that decriminalized homosexuality and provided them with equal rights. These legislative changes include decriminalization of homosexuality in Illinois in 1961, The first federal gay rights bill was passed on on 1975 that addressed the problem of discrimination on the basis of sexual orientation. Wisconsin outlaws discrimination on the basis of sexual orientation in 1982 (Carbado, 2017).

The Gay Rights movement helped to increase the acceptability of the society towards homosexuality. In a society predominantly composed of Christians, where homosexuality is considered to be a sin, it was considered criminal to be homosexual and often considered unnatural. This proved to be a big challenge for homosexual to express their sexual orientation, out of fear of presecution. The gay rights movement not only increased the acceptance of homosexuality but also gave homosexual individuals the courage to express themselves freely and without the fear of being persecuted. The acceptance also showed in the American culture, with several openly professed homosexual musicians and artists became exceedingly famous (Enriquez and Saguy, 2016).

References:

Amadeo, K. (2018). 4 Surprising Ways the New Deal Affects You Today. Retrieved from:https://www.thebalance.com/fdr-and-the-new-deal-programs-timeline-did-it-work-3305598

Augustine, D. L. (2017). The Nuclear Crisis: The Arms Race, Cold War Anxiety, and the German Peace Movement of the 1980s.

Barnhisel, G., 2015. Cold War modernists: Art, literature, and American cultural diplomacy. Columbia University Press.

Carbado, D.W., 2017. Black rights, gay rights, civil rights. In Sexuality and Equality Law (pp. 305-328). Routledge.

Davis, L. E. (2015). The Cold War Begins: Soviet-American Conflict Over East Europe (Vol. 1255). Princeton University Press.

Davis, L. E. (2015). The Cold War Begins: Soviet-American Conflict Over East Europe (Vol. 1255). Princeton University Press.

Enriquez, L.E. and Saguy, A.C., 2016. Coming out of the shadows: Harnessing a cultural schema to advance the undocumented immigrant youth movement. American Journal of Cultural Sociology, 4(1), pp.107-130.

Hardman, J. (2018). The Great Depression and the New Deal. Retrieved from https://web.stanford.edu/class/e297c/poverty_prejudice/soc_sec/hgreat.htm

Pells, R., & Romer, C. (2018). Great Depression | Definition, History, Causes, Effects, & Facts. Retrieved from:https://www.britannica.com/event/Great-Depression/Introduction