Causes and Consequences of the Great Depression Essay

Causes and Consequences of the Great Depression - Essay Example This write-up will discuss events which contributed to this economic crisis and its consequences. The events that resulted in this calamity include poor economic policies, malpractices and increased tariffs (Ross 1998, p. 183). In the late 1920s, there were no adequate regulations which governed trading in America’s stock exchanges. Consequently, traders exploited these shortcomings to their benefit. Overall, the investors’ funds were vulnerable to unscrupulous traders. Unscrupulous trading in the stock market was one of the triggers of stock market failure. Subsequently, the values of shares began to plunge. The decrease in the value set off events in other industries, which culminated in this economic calamity. However, historians and economists argue that the decrease in the value of stocks in the market was not the cause, but a symptom of an impending economic calamity. Decreased market confidence resulted from the general failure in entities, poor policies such as increased taxation and dismal performance of other industries. According to economists, the collapse of markets denotes the final symptom of an eminent economic calamity. Although the collapse of the stock market may be a symptom rather than a cause, the resultant panic caused rapid deterioration of the economy in both America and the globe (Robbins 1971, p. 90). It is vital to realize that the great depression was a culmination of the coupling of various factors. Such factors included unfavourable tariffs. There was a general rise in the tariffs to finance the governmental operations. However, the higher taxes resulted in the government having more funds. During this period, governments undertook rearmament programmes. Subsequently, vital industries did not receive appropriate funding to stimulate the economy. Despite the imperialist policies adopted by nations, there were positive attributes from nations spending massively on defence programmes. Government globally were able to em ploy additional workforce. The massive defence expenditure did not improve the economy. Therefore, it denied the economy vital resources that would have improved nations further. The military ambitions were realized at the expense of the global economy (Lied 2002, p. 234). During this era, the international trade was not properly developed. Additionally, the emergence of global alliances hindered trade further. Globalization was inexistent; hence, economic panic due to failure of stock markets in America resulted in an economic calamity. If international trade had been properly developed, it would have mitigated the impact of the Great Depression. It would have provided optimism in the economic sectors globally. However, the existing global alliances, which pitted Germany and the United Kingdom (UK) against each other, only made the situation dire (Smiley 2002, p.153). Countries only traded in their alliances; thus, there was minimal business among nations such as the UK and Germany , which represented the global economic forces. Such enmity hindered trade among nations that would have mitigated the depression. Global politics had massive implications on the depression. Proper politics would have enacted measures that would have encouraged economic improvements. However, the political stands during this era resulted in further degradation of the economy (Klein 1947, p.157). The Great Depression was global; hence, there were numerous factors which triggered its occurrence. While the collapse of the