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Paper代写:How Did the Economic and Political Environment in the 1930s Lead to the Great Depression

2019-02-11 | 来源:51due教员组 | 类别:Paper代写范文

本篇paper代写- How Did the Economic and Political Environment in the 1930s Lead to the Great Depression讨论了美国的经济大萧条。20世纪30年代,美国被大萧条席卷,与其他同时遭受大萧条的国家相比,大萧条对美国的影响是巨大的。十九世纪中叶以来,自由主义经济思想不断发展,美国经济处于一种虚假的繁荣状态。美国经济在20世纪30年代迅速发展到空前的繁荣,在世界上起了决定性的作用。本篇paper代写51due代写平台整理,供大家参考阅读。

Great Depression,经济大萧条,paper代写,代写,essay代写

Introduction

During the 1930s, the United States was being swept by great depression, which was a huge impact to the United States compared with the other countries that suffered from it simultaneously (Peter Temin). Since the middle of the nineteen century, the liberal economic thought has been developing continuously and the economy of the United States was in a false prosperity. The economy of the United States developed rapidly into unprecedented prosperity in the 1930s, placing a decisive role in the world (Alford B.W.)

Behind the prosperity of the economy, latent crisis were found in the growth of the economy. The dramatic impact of the great depression could not be ignored and the impact of the great depression was far more profound than any recession in history.

The phenomenon of the great depression is a valuable research issue. The research paper will analyze the reason why the great depression would happen in the United States concerning the economic environment and illustrate the impact and phenomenon of the great depression both economically and politically.

The Causes of the Great Depression

This recession is based on agricultural products prices fell as the starting point: the first occurs in the wood price (1928), which is mainly due to Soviet wood competition; but the greater disaster is coming in 1929, excessive production of Canadian wheat, the United States forced down all the places of origin of agricultural products the price of grain. Whether it is basic in Europe, America or Australia, agricultural recession due to financial collapse and further deterioration, especially in the United States, a speculative boom led to a lot of money back from Europe, then crashed in October 1929 the frightening Wall Street stock market. The effects of the great depression than any history of a recession are much more far-reaching.

The United States seems to be really in prosperity in the summer of 1929-- the overall stock market rapidly rose and all the people seemed to gain benefits and earn money from it (Studs Terkel, 2001). It boosted the economy of the America and the money gained from the stock market was being consumed in the American economy. With the development of economic liberalism, the economy of the United States was in a false prosperity in 1920s, the stock market was over inflated, and the social contradiction was very sharp. The economy of the United States was in a prosperous situation, gradually mastering the world's economic hegemony, which made New York the world's financial center due to innovation of domestic technology and laissez-faire policy carried out by the government. The stimulation of the First World War and the relatively stable political and economic situation after the war also provided good conditions for its development. There were, however, potential problems hidden in the prosperity, impeding the future economic growth under such environment. Behind the prosperity of the economy, the United States has long fallen into a situation of blind investment that led to imbalance of the economy, agricultural recession and increasing unemployment rate. The expansion of the supply greatly exceeded the ability to pay at home and abroad and the overproduction capacity problem was more and more serious.

First and foremost, the unequal income between the rich and poor was a serious problem. The consumption capacity of individuals has not risen significantly, because the average wage of workers in the 10 years since 1920s has remained unchanged (Cristina D. Romer, 1993). Only 10% of American invested in the stock market, leading to a widening gap between the rich and the poor. Data has been shown that about people who own the highest earnings than others amounted for approximately five percent at the period of depression, and their income occupied a third of the personal income among the society (Galbraith& John Kenneth 2009). An economy with a large gap between the rich and the poor largely depend on two aspects. On the one hand, the only way for the rich to get more money is to invest in existing companies, new industries, etc. During this period, income of the individuals has increased, while the income level of the upper class was higher than those who were in lower class and the increasing rate was higher. With the implementation of s high income of upper class, there was also a tendency for the rich to accumulate more and more money for an investment. The United States in 1920s was in an era of prosperity, and the consumer demand was strong, which stimulated investment, so it was popular for people to invest and promote the products. The growth of advertising promotion and payment by installments were tremendous, which allowed consumers to spend their future money. Payment by installments and the promotions led to the strong demand of consumers that would stimulate the rapid growth of investment. It was a risk, because it stimulated and raised the scale of the capital investment and whether consumers could pay their bill at the end was unknown. If individuals could not pay the money, the investment would not be able to get a reasonable compensation, and the huge investment scale was likely to cause a serious economic crisis. When the consumer demand decreased, the market would inevitably fallen into crisis. On the other hand, there was no need for the rich to buy extra ordinary commodities instead of the luxury products that met their needs (Galbraith, John Kenneth, 1954). High levels of investment as well as the commodities with high prices that being bought could stimulate the economy, while difficult it may be for those who could not easily reach this goal, because it was prohibitively costly for some individuals. Such controversy indicates that it was too difficult to depend on the rich to boost the economy. Unreasonable investment without satisfying the need of the consumption capacity does not make sense, which also led to the reality that the actual economic growth in the United States is slow.

Secondly, production department workers out of employment which will make consumer goods sales decreased, also resulting in workers unemployed of the sales department. And sales of consumer goods decreased in turn to make the investment to further reduce, the two major categories of intensified interaction driven production increasingly decline, rising unemployment even as low taxes and high. Profits and other favorable factors may also contribute to the crisis since the outbreak. A boom in 20s, mainly due to the abundant natural resources, industrial and agricultural production growth, technological progress, labor productivity, consumption and expand foreign trade and prosperity. However, many Americans in poverty situation and exist some weak links of the national economy, caused the Great Depression broke out. However, until the end of 20s, most Americans still blind optimistic prosperity will continue.

In addition, there was neglected or ignored some is not conducive to the economic development trend in 20s. And agriculture has not fully recovered from the recession, the farmers in this period always poor. Besides, the industrial sector wage level is high, many of them are false. For example, in 1920s, the total industrial output value increased by almost 50%, while the number of industrial workers did not increase, transportation workers actually decreased. In the low wage service industry workers increased most, which undoubtedly also includes a lot of unemployment due to technological progress and technical workers. So those statistics digital wages increased slightly, it seems not reflected reality. Because of the workers and peasants who are the basic consumer, these two types of people encountered economic difficulties will affect some of the consumer to goods market.

Furthermore, Galbraith and John Kenneth have pointed out in their articles that productions were exceeding the consumption demand during this period. The widening gap between the rich and the poor in the capitalist society will inevitably lead to the contradiction between social production and consumption, which was not conducive to the healthy development of social economy. Production and consumption of the society must be balanced, and in this way can the social economy run smoothly. National income expenditure could be divided into two respects. One is used to invest in production and the other is for consumption. In the industrial society, the consumption of industrial products accounts for a large proportion of the total social consumption, but the number of consumption volume for each people was limited. The government was likely to made some wrong decisions or predictions towards the need of the market and individuals. In 1929, the over-confident of government caused the so-called inventory recession (Cristina D. Romer, 1993).

Besides, economic growth was too dependent on the stock market. Compared to the investment in technological innovation, many companies were more willing to put money into the lending market, so the capitals would flow into the stock market at the end. Money faded away from the real economy, flowing into the stock market, which laid the basis for future American corporate failures and the great depression (Galbraith, John Kenneth, 1954). Most of the consumptions were from the profits of the stock market, and most of the investments were gathered in the stock market. Once the stock market crashes under such condition, the recession is unavoidable.

What is more, the structures of many banks and companies were unreasonable. In the discussion of the events that occurred during the depression, we are inclined to put a series of bank failures in a very important position. Relevant data shows that approximately 9755 banks went bankrupt due to financial difficulties in just 4 years, accounting for 1/3 of the number of banks in America (Scott B. Sumner, 2015). Coupled with the active liquidation, mergers and acquisitions, the number of commercial banks has been reduced by over a third. The first banking crisis since the end of 1930 was marked by a wave of bank failures probably due to poor lending and investment. The banking system tried to satisfy the demand of depositors as a whole only through the multiplier contraction effect of the deposit. In this case, regardless of the quality of assets held by banks, a bank run, which is a phenomenon that many customers of bank withdraw their cashes from the bank due to the financial crisis or relevant influences about the panic simultaneously, caused by any reasons to a certain extent was not unreasonable(Studs Terkel, 2001). Banks had to resort to certain measures such as selling assets in the market, which will inevitably result in the decrease in the market value of these assets as well as the devaluation of other assets held by banks. It was the decline of the value of the assets held by banks that has become the most important cause of capital damage, especially the decline in the market value of the bond portfolio, rather than the default of a particular loan or bond, which led to the occurrence of the bank failure. The banks were so vulnerable that they could not able to confront with the depression and it would be likely to bring a family to ruin when bank failure occurs (T.H. Watkins, 1998). The new structures adopted by the companies such as the holding companies or the investment trusts, showing that external reasons like bankruptcy or default on the bonds would have great impact on such companies, which makes it very risky to survive.

Next, social security system is the "stabilizer" of social stability and it could reduce social unrest and panic, while it was not until 1935 that the United States began to establish a social security system to guarantee the right of the American people. Before 1935, Neither Americans had no pension insurance, medical insurance, nor unemployment insurance. In 1920s the Americans even once regarded the rise of the stock market as the American economic security, which indicated speculation and madness of the stock market. Once the stock market crashed, and the economic crisis caused by the great depression occurred, the city unemployment increased and there was no social security for people of the United States. When the people of the United States who lived in cities became unemployed without social security, their living conditions would be worsen than the rural people who at lease owned a lowest living guarantee by farming.

 Last but not least, laissez-faire doctrine and relevant economic policies adopted by the United States for a long time were one of the integral parts that contributed to the great depression (Scott B. Sumner, 2015). Laissez-faire policy is the traditional economic thought of capitalism since the industrial revolution, having a profound influence on the development of capitalism. Those who hold the belief of Laissez-faire policy tend to perceive that the market mechanism is an "invisible hand", which automatically regulates economic activities, thus inefficiency and waste would occur under the government interferences. Before the economic crisis, the U.S. government has regarded laissez-faire policy as the mainstream ideology of economic development to adjust economic activities, and take relevant economic policies. For instance, the government strictly controlled currency issuing amount, adhered to the principle of maintaining a basic fiscal balance between revenue and expenditures (Scott B. Sumner, 2015). Faced with the crisis of failing and broke, banks and companies were void of practical measures from the government and so does the people who were unemployed (T.H. Watkins, 1998). This kind of liberalism economic thought contributed to the crisis of economy step by step, triggering the great depression to certain extent. In response to the economic crisis, the United States President Hoover still adhered to the traditional laissez-faire doctrine, opposing government intervention. 

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