Great Depression Dbq

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Recommended: Explain the causes of great depression

Undoubtedly the Great Depression of 1930 was one of the most ominous phenomenon in the economic and global history. This paper looks at three important aspects of the slump; first, did the crisis occur in the United States or it was a global event; second, if it occurred in the US, what was the reason behind the transmission of the crisis to other countries? At the end, the relation of the crisis and the presence of the Second World War will be delivered and the conclusion of the paper.

The orthodox view believes that the Great Depression originated from the States and it blames the monetary mechanism of 1920s for the occurrence and transmission of the Great Depression (Temin, 1993). During 1920s virtually all of the economic powers had …show more content…

Gold standard has three essential characteristics: Firsts, flow of gold between economies without any barrier; second, the maintenance of fixed currency in terms of gold and, as a result, also other currencies; and third, the absence of lending international organization such as International Monetary Funds (Temin, 1993). After the First World War the US accumulate vast amount of gold from the other European country as reparations or the intervention cost that it implement during the war. However, under the gold standard there was no mechanism that forces the US to put this resource back into the circulation. Nonetheless, the Fed implemented restriction policies in order to curb speculation and outflow of gold. The polices not only did not prevented speculation but also its diminish the aggregate demand and bring economic downturn in the US. Meanwhile Bank of England increased the interest rate in order to attract capital and recover the outflow of gold. This policy brings long-term unemployment as well as public strike in the UK. Moreover, Germany had to pay huge amount of gold as reparation to other countries. As the America, UK, and Germany contracted it brings the other countries to recession under …show more content…

World leader should stabilize the world by the following responsibility that it has; First, maintaining relatively open market for distress goods; Second, providing long term loans for countries in the case of recession; and the last but not the least, discounting crisis. Evidences prove that America fails in all of these duties; firstly, it implement Smoot-Hawley Tariff" while it supposed to smooth the international relation; Secondly, the US stop giving long term loans to Germany and France in the time of the need; thirdly, it bided up the price of Gold and silver in the time were countries have gold and silver standard (P.Kndleberger,

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