I. Describe how the Great Depression was Similar to the Panic of 1893
The Great Depression and the Panic of 1893 were both characterized by the unusual high rate of unemployment with companies that were very busy holding back on production or standing idle. In both events, most banks and companies completely went out of business with Americans losing homes or savings, and the general economy was in a state of low activity (Sherman, 2006). Also in both events, the Wall Street in New York was pivotal to the fall of the whole economy and the governments both faced political turmoil and setbacks.
II. Describe how the Great Depression differed from the Panic of 1893
The Great Depression resulted from the stock market crash while the Panic of 1893 was from the decline of U.S. gold reserves and the uncertainties on the U.S. industrial surpluses that required foreign markets. The panic of 1893 was also less severe than the Great Depression because the later had an interconnected, larger, and more complex industrial economy which affected people more directly.
III. Analyze the reasons that led to the Great Depression
Profoundly, some pivotal historical events have had an enduring impact on ensuing events and the stock market crash of 1929, otherwise known as the Great Depression stands out as such an event. The stock market crash initiated this period of vast economic, social, and political changes that altered the whole remaining 20th century in ways that couldn’t be anticipated by anyone as the 1920s came to a conclusion. This crisis mainly hit the Wall Street in New York where most Americans actually owned stocks. The stock investors who were loaned money by various companies sold their stocks to raise the money needed for the reimbursement of these loans requested by these companies (Sherman, 2006). This action led to the market losing its value as brokers could not find buyers to keep the stock value buoyant. In October 24, 1929, the day came to be known as ‘’Black Thursday’’ as stock prices plummeted. This extreme event deprived millions of Americans of their jobs, savings, homes, security, pride, and hope, while investors went bankrupt and hundreds of banks failed. The market crash served as a warning to the Great Depression, although the economic turndown did not precisely start during this period. Lasting for a decade, the Great Depression is America’s worst economic downturn in its history.
IV. Analyze the reasons that led to The Panic of 1893
This event resulted from the turndown of U.S. gold reserves and the immense uncertainties on U.S. industrial surpluses that need foreign markets. The loss of gold brought the suspension of gold recovery seem more susceptible, and hence a diminution in the gold value of the dollar. In April 21, 1893, there was a downturn in the general economy with the pronouncement of the U.S. gold reserves falling below the 100 million dollar mark. This also led to the plummeting of stocks on the New York exchange with many banks and commercial institutions going out of business. Depositors withdrew their finances and life savings from the failed banks. Investors also turned cautious with their money due to the disquiet about the dependability of the banking system and the stability of the dollar (Sherman, 2006). Most workers were laid off and various firms held back on production due to the downturn in export trade and the slow business activities.
V. Identify what factors helped end the Great Depression and the Panic of 1893
One factor that helped end the long wave of the two historical events was the penetration of U.S. exports into new and growing world markets by major U.S. industrial giants. Businesses that wished to compete internationally and establish foreign ventures were actively supported by the government. In addition, the extensive reforms in the economic, institutional, and political systems helped end the lingering economic crisis in both events. This was specifically achieved by eradicating legal, institutional and political blockades against industrial consolidations and business combinations (Sherman, 2006).
VII. Analyze how the Great Depression changed American politics and society
The Republican Party that ruled the country when the Great Depression began suffered a political fall and hostility and the Democrats were suddenly regarded as the ‘people’s’ party from both the middle-income and lower-middle groups who formed much of the greater population. The Democrats extensive reforms were supplemented by this majority apparition although they did not cure Depression. The Democrats ‘New Deal’ that resonated well with the public brought in legislations that regulated the banks and the stock market. The materialization of these reforms could have only surfaced from the political cataclysm caused by the Great Depression (Sherman, 2006).
The Great Depression and the Panic of 1893 are some of the two noticeable economic downturns which had effects on both Americans and the world at large. The implications of these two events were far-fetched to major systems of the country to the ordinary Americans. The events were two time-bombs waiting to exploded despite its early warnings which were tacit until it could not be contained any more. These events brought out a wider focus and scrutiny in any changes in the Wall Street with no repose on assumptions that led to the ignorance of both events. The scenes and sights projected from these events brings in a picture of long suffering and hopelessness that defines an era and government, while political and social gains can still be achieved from these inopportune events even though the parties involved are not credible enough. Although the two events resulted from two different circumstances, it taught us all severe lessons that bring in a cautionary tone in the meticulous legislation and regulation of political, social, and economic systems that can end up being catastrophic.
Keywords: economic downturn, meticulous, buoyant, market crash, market value.
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