Economic Factors Contributing to the Great Depression

Paper Summary:

This essay examines the economic causes of the Great Depression and evaluates why it was such a significant event in world history. The Great Depression was one of the darkest periods of the 20th Century, the entire capitalist world economy came precariously close to collapse. It affected virtually every civilian of Western civilization from the wealthy bourgeoisie to the poor proletariat. The paper focuses on the Wall Street crash and the Smoot-Hawley Tariff and the role that each played in precipitating the Great Depression and puts forward extensive evidence that suggests that the Wall Street crash actually played a bigger role than the Smoot-Hawley Tariff.

From the Paper:

"As a fundamental principle of economics is that voluntary trade makes everyone involved better-off, economists were almost uniformly critical of the Smoot-Hawley tariff, and Hoover received a petition signed by more than 1,000 economists urging him to veto the bill. Ultimately, he signed the Smoot-Hawley bill into law on June 17, 1930. Once enacted, it established the highest average tariff level in American history. As Kenneth Davidson said: "The Smoot-Hawley tariff was part of the general "beggar thy neighbour" polices adopted worldwide during the early 1930s." While the Wall Street crash had a clear and direct impact on the American economy, the effect of the Smoot-Hawley tariff on precipitating the Great Depression is plagued with ambiguity as it had more of a vague indirect global impact."

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