Great Depression In Banking Crises
Peter states that there was a drop in business productivity during the Great Depression in four of the major nationwide economies. There was a decrease in industrial output by almost half in both Germany and the United States. He argues that it fell at a slower pace but endlessly in France, and stagnated in Great Britain. Industrial production fell at higher rates as compared to National Income since services did not bond much, but reduced abruptly. Peter also states that real per-capita income in the US fell by a third. He also stated that the Great Depression led to an increase in the number of unemployed individuals, thus rendering more people to go to the few remaining offices to seek employment. A number of citizens sold their farms following job lay off and their inability to withdraw their money from banks. He concluded that the depression varied significantly in different countries but affected the majority of the countries in the world. Very few Countries all over the World were able to escape the 1930s economic hardships.
Effects Of The Great Depression
According to Kimberly, The great depression overwhelmed the Economy of the United States. Half of all the banks failed, homelessness increased at a high rate and unemployment rose to 25%. Prices for housing dropped thus affecting landlords, 60% fall in international trade, and prices of commodities fell by 10%. She stated that the stock market took 25 years to recover. The great depression also resulted in unemployment when the level of unemployment doubled from 3.2 % to 8.7% and later skyrocketed to 14.9 by 1933. Approximately 15 million people were jobless at the time. However, Kimberly says that the Great Depression also had some beneficial effects. Safeguard programs were installed it makes the depression less likely to happen again. The New Deal and the expenditure for preparation of World War 2 shifted the economy from deprived free markets to a mixed economy. The dependence was more on the government spending than on its success. She also states that the resulting consequences of the Great Depression show that the process was gradual, but also necessary. Also, half of the nation’s banks failed and banks had used the people’s deposits to invest in their stock market.
The Great Depression: Financial System
Mutuku states that the financial system experienced the most difficult and chaotic conditions in history during the Great Depression. It was one of the darkest economic times in American History. Bank failure led to the shutdown of the banking system and other markets. Also, high bankruptcy rates affected every borrower except the government. At the time, both the economy and financial system were at their lowest points. He states that economic collapse resulted in the loss of confidence in financial institutions and commercial banks. It wiped out millions of investors. Additionally, the consumer expenditure and venture dropped, leading to sharp declines in business productivity and deteriorating companies laying off employees. Homelessness also increased to greater heights. Most people stormed into the banks they had invested their money demanding their savings. Some people were unable to withdraw money from their bank accounts and were unemployed, thus making them lead hard lives. Depositors who feared that banks might fail led them to withdraw their money, forcing liquidation of the bank's assets which played a part in the failure of the banks at the time. Bankruptcy among the banks and financial institutions led to an economic crisis.
Amadeo, K. (2018). Effects Of The Great Depression | The Great Depression Facts.
Mutuku, C. (2018). The Great Depression.
Temin, P. (2016). Great Depression.In Banking Crises (pp. 144-153). Palgrave Macmillan, London
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