The Impact of the Great Depression

THE IMPACT OF THE GREAT DEPRESSION
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The Impact of the Great Depression
The "Great Depression" was a period in history when businesses were greatly affected and many people were out of work. The Great depression began on October 29, 1929, when the United States stock market crashed. What followed next was an economic slump that threw the whole world into a spin, owing to the fact that there was a close relationship that existed between the United States and Europe since the First World War. At the end of it there were 12 million people who had become jobless, with 12,000 being made jobless at the end of every day, 20,000 companies had gone bankrupt, 1600 banks had gone bankrupt, and sadly, there were 23,000 people who committed suicide, the highest ever number (Romer, 1990). This paper is going to discuss the impacts that the Great Depression had on the financial sector, the labor market and the family fabric in the United States. The Great Depression was a major economic phenomenon that has serious and widespread economic effects; and it only ended with the entry of the War Economy that characterized the Second World War (Romer, 1990).
Financial Sector
The Great Depression was characterized by banking panics and monetary contraction when the four waves of banking panics assailed the U.S. Banking panic occurs when depositors lose confidence in the solvency of banks simultaneously and demand their bank deposits to be paid to them in cash and in full (Gay, 1932). This caused many people to line up in front of banks during the depression with a sole mission of getting a cash equivalent of their savings. Ordinarily, banks only hold a fraction of all deposits as cash reserves, meaning that for them to raise the required cash of all the people demanding their money back, they would have to liquidate loans. Such a process of hastily liquidating cash has the potency of causing a previously solvent bank to fail completely. The widespread banking panics across the United States continues all the way to 1933, when they culminated with the infamous ‘bank holidays’ as declared by President Franklin D. Roosevelt, on march 6, 1933 (Romer, 1990). The bank holiday meant that all banks had to remain closed until such a time that they were deemed solvent by government inspectors.
Labor market and industry
Those who were lucky enough to maintain their jobs were during the Great Depression faced a leak future that was clouded with uncertainty. During that time, extensive working hours, extremely low pay, extensive working hours and dangerous working conditions were the common thread in the labor market. All these factors combined created an atmosphere of unrest and fear among the working few (Gay, 1932). The percentage of the working-age population that was employed fell significantly between 1930 and 1940, with much of the decrease occurring among the men. The perce...