World War I Essay Example for Free

World War I Essay In a major world event such as world war, the world economy is much affected. At first it is surprising to know that there is a boost in economy during the war. Actually, the economic problem really took place after the war. Indeed, economic recession happens as an aftermath of a war like what happened after World War I. Just like the case of 1921 recession, the world economy experienced its worst condition years after the war. What is the reason for that? Economic experts believe that the end of war time production as well as the influx of returning troops caused a great recession in the world economy. In a major world event such as world war, the world economy is much affected. At first it is surprising to know that there is a boost in economy during the war. Actually, the economic problem really took place after the war. Indeed, economic recession happens as an aftermath of a war like what happened after World War I. Just like the case of 1921 recession, the world economy experienced its worst condition years after the war. What is the reason for that? Economic experts believe that the end of war time production as well as the influx of returning troops caused a great recession in the world economy. During World War I, there were a lot of war time related productions such as weapons that cause a certain boost in world’s economy. If there are greater productions, it follows that a lot of labor is needed. This will lessen the rate of unemployment in those countries that are involved in the war. In the case of World War I, the production of war related products stopped which means that a lot of workers who are related to the said industry lose their job. The increase in the production of money because of the increase in war expenditure resulted to inflation. Although there is an increase of the number of money in the circulation, still the economy is not in good situation because of high prices. Other than that, those troops who return after the war added to the number of unemployed people. Although the America experienced the worst effect of recession in 1921, still countries such as United States was able to recover and even experience economic growth. New factories that are producing radios and automobiles emerged. Aside from that, a lot of women left their work to give way to the returning troops. That is the reason why it was easy for the United States economy to recover after the post war recession. But still the economic growth that the United States had experienced gave way to what is known as great depression. The great depression in US economy started when a breakdown in the stock market had occurred known as Black Tuesday. As we look at the world wide great depression, we cannot say that it is a sudden collapse of the world economy. Black Tuesday was just the start of it. In 1930, US government and business spent so much but the consumers who suffered from a great loses during the black Tuesday decreased their expenditures by ten percent. Other than that, there was a severe drought in the US during that time. As a result, personal income, tax revenues, income and profit, as well as international trade had declined. Meanwhile, there is also a belief that the Great Depression was caused by poor policy of the American Federal Reserve System. Because of the belief that it is for the regulation of money, the said institution allowed the money supply to shrink. They believed that they can recover easily just like what happened during the 1921 recession. They didn’t expect that it will affect a great number of investor that will cause them to stop investing. Meanwhile, there are also other historians who blame the U. S. Smoot-Hawley Tariff Act in the decline of international trade which later worsened the Great Depression. Because of the fact that foreign trade is just a small part of their economy, US had ignored the possibility of affecting the economy of other countries. As a conclusion, we can say that the experience of fast recovery from the post World War I recession gave so much confidence to the US economy that they ignored the possibility of another economic breakdown such as the Great Depression. Because of their so much economic security, they did some careless act that lead to Great Depression and even worsening the situation.