Global Depression Essay, Research Paper
The crumbling of Western culture after World War I mirrored how the global economy would as well. After the War came what ultimately was the global state of depression. This was in no means meant to describe the world emotionally, but most likely it did. People were jobless, and some penniless. There were dissatisfied nations dealing with terms of treaties with which they had no agreement. The main reason for the spread of the depression was that of the lack of self-reliance that ultimately lead to the deterioration of the global economy due to the chain reactions resulting from the agricultural issues, the failing of the global financial systems and the resistance to war reparations.
The first cause for the spread of the depression was that of exo-dependant field of agriculture. The field of agriculture was defiantly self-reliant just due to how they handle business: they grow food and sell it to people around the world. During the war, the farmland were neglected and destroyed from battle. No one really cared about tending to the lands during that time of crisis, besides, a lot of the male workers were on the battlefields themselves. When they started back up again, the farmers had to buy expensive equipments to cultivate their lands and to start production again. This time when they started up, they felt that they had to produce a whole lot more so they could sell more in order to make their money back for their expensive equipment. The farmers over-produced, and the prices for their product fell. With no one to buy their goods, these farmers could not afford to pay off their debts for their equipment. This would also affect them later when banks began to call for farm loans, due to the market crash. In conclusion, the agricultural reliance on society imposed the spread of depression when they over-produced crops in order to meet their assumed societal demand.
The next cause of the spread of the depression was that of the global financial systems. The first two systems were that of the American banks and stock exchange. In America, people were able to buy their stocks on margin in which they paid only about 10 percent of the stocks actual value, and as long as the stock went up, the people were able to profit. But in contrast, if the stock prices fell, the investors would have to pay the difference. When the stock market began to crash in September of 1929, people began to rapidly sell their stocks in order to not have to pay as much money back to the companies of their stock. It also forced those with stable stock to sell in order to pay off their debts. People also had to withdraw their savings as well. With the rapid and simultaneous withdrawals, banks were forced to call in payments for loans, which eventually caused the banks to fail. With the American banks and stock market in the dumps, this then lead to overseas troubles. European banks were failing due to Americans pulling out their overseas investments with hopes of stabling their own. When the chief Austrian bank, the Credit-Anstalt, declared bankruptcy, it caused a domino effect on the rest of the prominent European banks. With the failure of the banks, France and Britain ceased payment on their debts to the U.S. The United States then denied France and Britain the right to raise loans in American markets. In summary, the collapsing of the American financial systems that in turn lead to the fall of European banks were too reliant on society to keep them afloat.
The final point of reliance that eventually resulted in the spread of depression was that of the war reparations suffered by the Germans.