History Sample Paper on The Greatest Depression

Introduction

The beginning of 1900s, there was a growing industrial revolution that halted when the stock market crashed in 1929. However, the stock market crash in 1929 didn’t cause the Great Depression. The American Economy was in chaos six months before October 29, 1929 and several factors in the 1920s exacerbated and resulted to the Great Depression (LaLande, 2014). These factors which consist in the social, political and economic dimensions are discussed below.

1.0 Social Factors

1.1 Flattering Prosperity prior to the Great Depression

The 1920s was a time when America over relied on production. Moreover, the automobile industry took the lead; and there was a huge gap between the rich and the poor. The poverty levels were above 60% of the population while only 5% of the richest people in America contributed 33% of the earnings. The wealthiest 1% possessed 40% of the nation’s resources (Reed, 2008). Notably, the disparity in wealth distribution was reflected in the uneven distribution of resources between industry and agriculture.

2.0 Economic Factors

2.1 Global Recession

While America experienced economic boom in the 1990s, Europe was still wallowing in the destructive effects of World War 1 that caused economic recession. Therefore, the American banking sector rose to global prominence. When Europe began to default on loans and purchasing fewer products from America, it caused the Great Depression to increase (Albers &Uebele, 2015).

2.2 Heavy National Debt

In the case of Newfoundland and Labrador several factors resulted to the nation’s financial predicaments. Expenditure during the World War 1 led to huge national debt and the expenses of financing the Newfoundland Railway. Moreover, government borrowing to finance its operations throughout the 1920s was massive, and post-war decline in global business made the situation worse (Albers &Uebele, 2015).

3.0 Political Factors

In the 1920s there was great devastation economically and politically for Newfoundland and Labrador. World War 1 led to an increase in the national debt of $35million, this was a great crisis to all the warred governments. The cost can be attributed to the resolve by the government to nurture its own global officials (Rothbard, 2000). Political disagreements were apparent in the post war years, as political rivals argued on whether to implement conscriptions or not. In addition, Newfoundland’s railway contributed to the increasing national debt.

When the Reid Newfoundland company sought the government for financial aid to operate its costly railway they had a $1.7 million deficit. Moreover, the service continued to have annual deficits summing up to $3million in the 1920s and 1930s. This contributed to two thirds of $80million national debt from Labrador and Newfoundland in the 1920s to 1929 when the Great Depression occurred.

Conclusion

Despite having accumulative deficits in budget, the Labrador and Newfoundland government continued to source foreign funding in the 1920s and thus sinking into huge debts. Interest payments increased and used up the country’s revenues making the provision of essential public services by the government unaffordable without having to borrow even more. In the 1927-1928 financial year 40% of the country’s revenues were used up in interest payments. Therefore the government had inadequate funds to finance any arising financial depressions, like the Great Depression.

 

References

Albers, T. &Uebele, M. (2015).The Global Impact of the Great Depression.The London

School of Economics and Political Science: Economic History working Papers, 218,