The Central Bank managed to cause depression with the use of strict monetary policy, according to Ben Bernanke, former chairman of the Federal Reserve. Any of the concerns posed by the Federal Reserve (fed) that exacerbated the Great Depression are below. Firstly, the Great Depression is related to the growth of the fed funds rate in 1928. The central bank was supposed to decrease the prices of funds, but it managed to raise them during the slump that started in August 1929 that later led to the stock market crash. Secondly, when the stock market hit, most of the investors changed to currency markets. In that period, the gold standard accounted to the value of a dollar in possession by the United States (Young, 2007). The interest of the speculators, in trading their dollars, created a run on the dollar in September 1931.
Thirdly, the fed raised the interest rates to maintain the value of a currency. They also induced the restrictions of the availability of the capital for the businesses. These severely affected the enterprises leading to bankruptcies. Finally, the investors withdrew all their deposits from the banks. This led to increased tension among the people and a negative effect to the economy. The fed ignorance reduced consumers trust and confidence in financial institutions as people withdrew all their money decreasing the money supply.
Solving Great Depression in America
President Roosevelt focused on solving the problems through calling experts and theorists to assist in generating the solutions to Great Depression. The Emergency banking bill (1933) focused on stabilizing the banking structure. The local conservation corps, the works progress administration, and national industrial recovery act were some of the initiatives taken.
Firstly, the Civil Conservation Corps took young men aged 17 to 23 to do work in the National parks and forest where much of the earning was set aside to support their families. These helped to raise the living standard of the families. Secondly, the Work Progress Administration provided jobs to over 8.5 million men to work in constructions of the roads, public buildings, and parks. The program improved the public property and employed the needy. Regulation of the working hours and prohibition of child labor was a responsibility of the National Industry Recovery Act. On the other side, federal emergency relief administration handed over money to states to create work relief programs. Thirdly, on the agricultural sector, the Agricultural Adjustment Act assisted farmers by paying them to minimize their produce. They also provided capital to farmers. This assisted in raising the living standard of the farmers and boosting the economic growth.
The Rise of the cold war
Soviet Russia found itself left out in international diplomacy. The tension between Russians and west became excessively ideological. Russia had enemies surrounding them. Lenin, in his statement, posed that Union of Soviet was bordered by capitalist who were violent as he looked at diplomacy as an arm to separate Russian rivals. This raised tension hence the outbreak of the cold war with the establishment of Russian Comintern (1919), with interest of revolutionary upheavals abroad.
Numerous events fueled tension and distrust between the west and the Soviets during the interwar period. Bolsheviks’ challenged the capitalist while British military collaborated with the white army in Russian civil war. It used the brutal method as the US failed to recognize the Soviet Union. This deviation, in both political and economic structures of democrats and capitalists, led to a high tension of cold war. During the civil war in Greece, the communist made the (ELAS-EAM) partisan movement, British troops ended the weapon distribution to ELAS-EAM while the pro-monarchist troops gained much strength. In the letter of Roosevelt (3rd April), Stalin urged that the secret bargaining did not promote the trust among the States.
A lot of postwar disagreement between democrats and capitalists leaders resulted from the separate definitions of wartime and immediate post-war meetings. 7 days later, after the Potsdam conference, an atomic bombing of Hiroshima made the Soviet distrust the America. After a while, Starlin protested against the US officials after Truman gave little soviet influence in Japan. Later, there was the end of the material shipments from the States to USSR when Germany surrendered (Watkins, 2009). The politicians were upset with the US since they believed that the US had no interest to support the USSR.
Changes contributed by Civil Rights Movement.
Many races in the past have been treated inferior. This was unconstitutional. Through the civil rights movements, currently, people of all races are well and fairly treated. They also have equal opportunity to succeed. The rate of racism in the United States has reduced with time. The minority groups have gained an impact of enjoying their rights like the majority groups. The leadership has become open to everyone irrespective of the color of the skin. Unlike before, only the white gained the leadership advantage (Wetting, 2008).
Some races were discrimined where the African Americans and other races were not offered equal education opportunity like others. Some laws separated the restaurants and schools where such were not accessible to African Americans. Through the civil rights movement, today, all people get the college education and jobs that pay well regardless of their race.
Young, William H, and Nancy K. Young (2007) The Great Depression in America. Cultural Encyclopedia.
Watkins, T. H (2009) The Great Depression: America in the 1930s
Wetting, Gerhard (2008), Stalin and the cold war in Europe, Rowman & Littlefield, ISBN 0-7425-5542-9