The Great Depression: Human Suffering Leads to Knowledge

There is an old adage, which states that failure is the stepping-stone to success. During the early 1930s, the world economy was confronted with one of the strongest and longest depressions the world had ever seen. This global economic slowdown was dubiously referred to as the Great Depression. Although the depression was considered the worst economic disaster of its time, it was an event that undoubtedly founded new economic theory and progress. The amazing reversal of economic theory from the start of the depression to current times can only be described as a learning experience. Thus, it is possible for one to say that the harsh impact of the Great Depression, led to an immense turn around in economic practice, which can be observed through government interaction with the economy and the use of the gold standard.

The Great Depression is widely believed to have started in the United States, but by the 1930s, the depression had swept around the globe effecting all of modern Europe. A depression, by definition, is a period of high unemployment and low business activity (Mitchener 339). It would not take long for people of the world to discover that this depression would be unlike any other. As a result of the stock market crash of 1929, investors entered a spiraling pattern of disaster. Stocks were being sold frantically at collapsing prices, leaving many shareholders with worthless stock. European loans were recalled from worried American bankers; leaving war debt Europe to fend for itself. Many European banks collapsed following the withdrawal of American assets. As a result, thousands of people lost their savings and caused many more people to withdraw their money in fear. Europe had depended heavily upon American loans to pay back war-debts (Nelson 1). Germany’s economy in particular, burdened by the debts forced upon it in the Treaty of Versailles, nearly collapsed (Beck et al 859). Unemployment skyrocketed throughout Europe and the modernized world. In Europe alone, over fifteen million people were unemployed, with six million of those living in Germany (Thackeray 64). Thousands of people were forced out of their homes on mortgage foreclosures and millions more lost their jobs and savings. People all over the globe were looking for work just to feed their families. In one scenario, forty-five men were arrested for sleeping in an arcade overnight in London, but the majority of them were more than willing to be arrested because jail time meant free meals and shelter (Garraty 164). It was commonplace for dozens of people to be homeless or searching for employment on every street corner. Months after months passed by and recovery seemed nowhere in sight. What appeared to be a simple economic slump, turned out to be the worst depression ever witnessed. All across the globe people called out for aid, but their cries of distress were largely ignored due to the belief in classical economics.