Comparing Recession to Great Depression Essay

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The Great Depression was a harsh global economic depression in the decade prior World War II. The Great Depression, while it happened far before the “Great Recession” of 2008, it can be greatly compared. During the Great Depression, all income, tax revenue, and prices dropped. International trade decreased by more than 50%, and U.S. unemployment climbed to just above 25%. Industrial cities like Detroit and Pittsburgh took the heaviest hits. While the recession of 2008 was not as drastic, it affected the world economy and resulted in a global recession more so than ever before. The percent of U.S. citizens unemployed had reached 10% as of 2009. Along with the challenges unemployment presented, consumer …show more content…
The confidence and economic advances were tested when the share prices on the New York Stock Exchange sharply fell on “Black Thursday”, October 24, 1929. In the few days before the crash, the market had been noted with being ‘severely unstable’, which was later linked to the debates for the passage of the Smoot-Hawley Tariff Act. This act, that was passed by President Hoover on June 17, 1930, raised a tax rate of 60% on over 3,200 imported products, which was at record levels, only lower than the Tariff of 1828. This act reduced American world trade by almost 66% between 1929 and 1934. Unemployment rates also jumped from 7.8% in 1930 when this act was passed, to 25% in 1933, just before the act was basically countered in 1934 with the Reciprocal Trade Agreements Act. On “Black Monday”, October 28th, more stockholders decided to get out of the market, and the Dow Jones continued to fall 13% that day. The next day, “Black Tuesday”, 16 million stocks were traded, and the Dow leaped another 12% downward. Many economists argue whether the Great Depression began bank failures, or bank failures began the Great Depression. One known fact is that by 1933, almost 11,000 out of 25,000 banks in America had died out. Just overnight, hundreds of thousands of consumers removed their deposits. Also contributing to the bank failures, was the Dust Bowl of the 1930s. Farmers had loans on their farms that could not be repaid because of the
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