Significance of the 1930's crisis for the international political economy

Significance of the 1930's crisis for the international political economy

Introduction

The purpose behind this paper is to understand in detail the events that took place in the 1930's that resulted in a crisis for the international political economy. The aim is to identify the key reasons behind this crisis, how did the event unfold, the major impacts of that crisis and how was that crisis dealt with. To begin with we will start by an assessment of the major reasons behind the crisis.

Discussion

Currently the world has been significantly under yet another economic crisis which has shaken the world, many people feared it was history repeating itself and the crisis of the 1930's was reoccurring all over again. In this context the term crisis implies towards recession and the economic turmoil various nations are putting up with based on the recession. However the condition today is far less severe than in the 1930's when the economy faced the most critical recession. The event of the 1930's crisis is called the great depression, which in itself shows the state in which the world was owned to the fragile conditions they were experiencing.

Background of the Great depression crisis

The recession the world witnessed in the 1930's was far greater and the worst that capitalism had ever even imagine about. The event shook up the economies of North America most of Europe and some other areas of the world that were industrialized. The economic crisis began in 1929 and ended in 1939, ten years of sufferance by millions of people. Before the great depression had actually taken place the US economy had already started experiencing the recession six months before the actual crisis took place. The reason why the American economy was already in a crisis of its own was because of the catastrophic collapse of the stock market price on the stock exchange of New York, this event took place on in the year 1929. The next few years were critical for the US economy since the stock market prices kept declining until 1932 where the stock price was drastically reduced to only 20% of their actual value. Historians term that horrific day as the Black Tuesday. The initial impact of this decline in stock prices has instantly affected countless investors, financial institutes and banks specifically those holding stocks had to bear a huge loss. The conditions were so bleak that a majority of banks were forced into insolvency by the year 1933 approximately 25,000 banks had failed and were moving towards insolvency. The adverse effects of the crisis were so severe that most people had lost complete faith in the economy many considered the condition to never ameliorate. As a result of this economic condition resulted in a decline in the overall reduced spending which effected production immensely since people feared the future and avoided any unnecessary spending Another growing concern because of the great depression was the increase in unemployment, a majority of people succumbed ...