The Great Depression (Essay Sample)

The Great Depression
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The prosperity decade of the America began to decline in the late October 1929. It was marked by collapsing in stock prices, banks failed, business closed their doors and some ruined investors went into depression. There have been a lot of explanations as to why the great depression took place, including analyses that point to excessive stock speculation and adverse monetary policies. Certainly the automobile industry figured prominently into this event. According to Heitmann (2009) the automobile sector can be squarely placed right at the heart of the reasons for the downturn. He points out that mass motorization played a key role in creating the most important yet necessary conditions underlying the depression. While the automobile sector was over-expanding, the market was becoming saturated and as its contraction began, this leading sector pulled the economy downwards. One remarkable weakness in the sector that would later contribute to the great depression was the considerable overproduction and market saturation which was greatly affected by drop in demand. Similarly, in the 1930s the industry entered a phase of technological stagnation that led to few major changes in the products in terms of how they were made. In total, the technologically dynamic industry of the 1920 paved way to traditional one that had no real gains in productivity. Heitmann (2009) further presents that the 1930s was decade that was marked by continual refinement of the automobiles as a technological systems instead of radical changes.
One of the Weaknesses in the American economy that contributed to the great depression includes the unequal distribution of purchasing power which subsequently led to reduction in customer demand. This was due to the small profits that were going to workers as well as other consumers such that they could therefore not create adequate market for the products that were being produced by the economy, implying that demand was not in harmony with supply. Similarly, the economy had a poor credit structure such that some small banks could frequently find themselves in trouble as many customers defaulted on money loaned, which saw to nearly six hundred banks collapsing annually. Moreover, there was poor diversification in the economy in the 1920s in which a downturn in some key areas of the economy would send a negative wave of shock in the entire economy CITATION Ste09 \l 1033 (Wiegand, 2009).
During the great depression, among industrial producers, the collapse in the motor vehicle sector was especially pronounced such that by the end of the year 1929, the reduction in the automobile output was the greatest in the entire manufacturing sector. Within a year after the stock market crash, the number of auto workers had shrunk to an estimated hundred thousand workers thereby reflecting and accelerating the dwindling car sales. The laid down workers suffered financially and therefore had to rely on the little savings they had or alternatively borrow so as to avoid even more severe hardships. At least for those workers who could work intermittently, this helped them in staving off some psychological sense of failure. As for the long-term unemployed workers, they came to develop a feeling of being less attractive to future employees.
Generally, family life was greatly changed in the sense that the family roles were muddled with the conventional masculine role of being the household provider becoming unavailable for many people. Maintaining families together became rather difficult and as result most people lost their livelihoods and their homes as well. Suicide rates also became overwhelmingly high with stories of bankrupt traders topping the headlines. Between 1929 and 1933, suicide rates rose to 17.4% per 100,000 population CITATION The04 \l 1033 (The Gale Group, Inc, 2004). For the employees who retained their jobs during this period, they had to accept severe pay cuts, reduced working hours as well as the unrelenting job uncertainty.
According to Wiegand (2009) the new deal began to show its effects as early as 1937. Indeed, the national annual income had climbed from $40 billion in 1932 to $72 billion. Much of the New deal entailed rebalancing the federal budget through cutting back on new deal programs such as the Works Progress Administration. Through the National Industrial Recovery Acts (NIRA) of 1933, which was one of the New Deal strategy, industrial sectors, in particular the automobile industry, were urged to do away with the then prevailing aggressive competition. This act therefore meant that automobile dealers were to sell below costs including the expensive car dealers like the Dusenbergs, which meant that there would be increased sells CITATION Bru11 \l 1033 (Brucekelly, 2011). Likewise, with the unionization of automobile workers there was profound social effect especially in Detroit. The unionization saw to the development and subsequent adoption of the seniority system, where new employees were not hired after a layoff until all those who had seniority had been returned to work. Consequently, with the new deal, Detroit automobile worker were ensured of greater security in their jobs and a heightened sense of responsible identity with the welfare and future of the city in which they live. According to Graham (1998), in March 1934, President Roosevelt himself, in league with the automobile magnates, thwarted the threat of a general strike of automobile workers on behalf of the right to organize ...