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licies designed to improve one’s own lot at the expense of that of other) of the 1930. Such policies contributed to a radical decline in International trade. This was evident from the decline of imports in the U.S from 1929, $ 1,334 million to $390 million in 1932, with the Europe. Conversely, U.S. exports to Europe fell down from $2,341 million in 1929 to $784 million in 1932. The world trade had declined by 66% between 1929 and 1934. In general, Smoot-Hawley did nothing to encourage confidence and cooperation among nations in either the political or else economic sphere during a risky era in international relations.

 

The Great Depression of the 1930 was the most important and turning economic event in the history of America. It caused massive hardship for numerous people and the failure of large fraction of the nation’s businesses, financial transactions and farms. It transformed national politics by vastly expanding government, which was increasingly expected to stabilize the economy and to prevent suffering. There was a remarkable improvement in the output per man-hour, but our gains were marginalized by the rise in the unemployment. The depression is best understood as the final chapter of the breakdown of the world wide economic. The depression can be under stood only in the context of the times. There are four huge differences as stated below:

 

1. The Gold Standard: Generally money is in the form of paper, but government was obligated, if requested, to exchange that paper for gold. Many countries went off the gold standard during World War 1, and restoring it was a major postwar aim. Britain, for instance, returned to gold in 1925. Other countries backed their paper money not with gold, but with other currencies mainly U.S. dollars and British pounds were convertible into gold. The higher interest rates depressed conversion of interest-bearing deposits into gold and strengthen confidence that inflation would not break the commitment to gold.

 

2. Economic Policy: Apart from the gold standard, economic policy scarcely existed. It was little belief that governments could prevent business sprawl. The lower wages and interest rates caused by slouches would spur recovery. Andrew Mellon, Treasury secretary under President Herbert Hoover, said after the depression started, “Enterprising people will pick up the wrecks from less competent people.

 

3. Production patterns: Agricultural productive materials were much more important parts of the economy than they are today. This meant that lower product prices could cripple domestic prosperity and world trade, because price declines smashed the purchasing power of farmers and other primary producers (including entire nations). In 1929 farming accounted for 23% of US employment (versus 2.5% today). Two-fifth of world trade was in farm products, another fifth in other raw materials. Poor countries (including in Latin America, Asia and central Europe) exported food and raw materials and imported manufactured goods from industrial nations).

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