Historically speaking, America has always been a country of affluence and excess. That is why when the country finds its economic stability threatened, it enters a tailspin that results in economic losses for the country and its population that also causes a ripple effect in the international community. These kinds of effects, which we are seeing now, were first seen and experienced by the nation way back in 1929, the era of the Great American Depression.
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The Great Depression was more than a state of mind for the people back then. It had long-reaching psychological and physical effects on most people due to their sudden lack of ability to provide for the most basic necessities such as food, shelter, and clothes. Oftentimes, they blamed themselves for their sorry state of life without realizing those bad economic decisions and political motivations of the government they elected to protect them actually caused their social situation. Nobody was spared from the depression. Together with the stock market crash, the upper crust of society found themselves without the financial ability to continue their lavish lifestyles dictated by the affluence of the era. Those who were unemployed believed that it was their fault they did not have a job. These were the people whose psyches were affected. Their self-blame and doubt spread across the lower tier of society until it became so widespread that it took the New Deal Era of governance to reverse the mindset. This was the program that opened the eyes of the people to the fact that the depression era did not affect just the low bracket of society and that if they were to overcome it, all sectors of society had to work together.
The Depression Era actually affected the international community as a whole. The world was changing and developing at a fast pace but the salary brackets of workers across the world did not compensate nor keep up with the growing world population. In Germany for instance, the nation struggled to afford the cost if World War I reparation and peace settlements. People were looking for somebody to blame for their hardships in life. Refusing to accept the truth that they caused the predicament they now found themselves in.
Countries like Britain and Europe took longer to feel the effects of the economic turmoil because of their political power setup. Britain was already suffering from a huge unemployment rate but because they had unemployment insurance and welfare, the jobless were somehow shielded from the effects of the depression. France on the other hand barely felt the effects because of their less industrialized status as a country.
The stock market crash of 1929 was caused by the greediness of people who borrowed heavily from others in order to play the stock market. Stock prices were at their peak and the market seemed to be the best bet in terms of investments. By 1929, the market bubble had burst and the stocks lost at least 80% of their value. People were left feeling destitute and the stock market could not entice new investors to spend in the market. The banking system was left in utter chaos as stock market loans remained uncollectible and, because banks themselves had invested in stocks, they found themselves unable to answer to their own depositor obligations, causing numerous bank runs across the nation. Upon Roosevelt’s ascension to power, he initiated a 3 day bank holiday in order to help banks copes with the bank runs. Later on, the Federal Deposit Insurance Corporation was established in order to ensure that a repeat of the bank runs would never happen again. Under the FDIC, banks could no longer invest in the stock market. This is perhaps the biggest change that occurred within the stock market as a result of the stock market crash of 1929.