In the decade between 1920 and 1930, the United States of America experienced success in their overall national economy performance. However, disparities in the growth of the various sectors of the economy posed a significant threat. In addition, the bulk of the gains from the economic prosperity rested on a small fraction of the population consisting of the rich people.
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Banks and other monetary institutions accumulated money from the public and left much of the population in a grave situation. Instead of lending money to the public, the major players in the banking sector invested their money in stocks and started playing theatrics of speculation for profit. Industries engaged in the production of consumer goods and manufacturing turned to stocks too, and ignored the need to invest in new production lines and enhancement of labor.
These practices led to the deterioration of consumer’s purchasing power. On the other hand, agriculture, which is one of the major basic components of the economy, suffered a great setback due to the high levels of surplus production. Weakening of the consumer’s purchasing power coupled with surplus production led to the fall in the prices of agricultural products by a huge margin.
Consequently, income and profitability in agriculture was fatally impaired. Farmers and other businesspersons who depended on agriculture could not afford to pay for services of the local banking system and thus they could no longer raise enough capital.
The aftermath of the First World War was characterized by concessions that required European powers to compensate each other and their debtors through monetary assets. Germany, the aggressor that ignited the war, obtained from the American banks huge sums of money to finance their settlements further draining the American economy off liquid money.
The organization of the American banking system had an anomaly where there was no security provided by government for the money deposited by clients. Consequently, unrestricted withdrawal by depositors often resulted in crisis. Misappropriation of banks’ funds by the managements compounded the problems faced by the banking system.
The stock market eventually crashed during the Wall Street crash. The government of the United States chose not to interfere with the deteriorating economic status for political reasons and hoped that economic forces would later stabilize the economy.
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With the prevailing depression, ramifications began to take effect and economic hardship set in. Industries could no longer support their employees, many people lost their jobs, and the affected had to turn to other sources of income to support their families. In addition, low-income earners had to liquidate their disposable assets to support themselves and their dependants. Consequently, the larger part of the population, which was at the bottom of the economic ladder deteriorated to abject poverty.
Competition for the meager employment positions ensued on racial and gender basis. The white race argued that they were of prime consideration compared to the black race while the male gender claimed to be superior to the female gender and wanted to be accorded priority.
The government, under enormous pressure, adopted unconventional tactics such as expulsion of the jobless from the country. Moreover, some of the jobless people opted to leave the country voluntarily to escape the worsening crisis. Migration into urban centers, substandard housing and taking up of low paying menial jobs were common phenomena in the United States, particularly the southern states.
Since most Americans faced hardship, they turned to mass media for consolation and the level of use of electronic mass media skyrocketed at the beginning of the decade between 1930 and 1940. Since America served as a market for many European goods, the effects of the Great
Depression were felt in Europe. Furthermore, the European countries’ situation in turn affected their former colonies, globalizing the disaster and helping precipitate the Second World War. The Great Depression only subsided in mid 1930s and was eventually extinguished in late 1930s.