2014年托福阅读真题：The Great Depression

2014年托福阅读真题：The Great Depression

The term the Great Depression refers to the severe economic crisis of the 1930s that affected the United States and eventually much of the world. It is considered the worst and longest period of high unemployment and low business activity in modern times. The 1920s was a period of great prosperity in the United States. During this period many Americans opposed government regulation of the economy in principle. They believed that in periods of economic setback the government should cut expenditures and wait for the economy to improve. This prevailing attitude was to change profoundly by the time the Great Depression was over.

By 1929, many weaknesses in the American economy became evident. The prospect for construction was adversely affected by the rising coists of construction and land. Farmers were facing difficulties as surpluses depressed prices for agricultural products. Consequently the potential market for consumer goods in farm areas dried up and banks and other financial institutions with loans outstanding to farmers were weakened. Many people lacked savings. An employment insurance, or other cushions were vulnerable to economic adversity. Especially if they had bought goods on credit as advertisements had urged them to do. And when they suffered, so did the manufacturers and retailers who served them.

The most dramatic and obvious cause of the Depression was the collapse of the stock market in 1929. During the prosperous years between 1925 and 1929 stock market prices rose about three hundred percent. By 1929 over a million stock buyers were forcing prices to rise much faster than corporate profits. It was a process that could not continue indefinitely. In one terrrible month starting on October 24, 1929 (now known as black Thursday), prices on the New York Stock Exchange alone fell in value about 26 million dollars, a decline of nine percent, and prices proceeded downward for another two and half years until by 1932 the stock market had lost nearly ninety percent of its value. It seems safe to assert that the enormous loss of wealth by individuals and institutions played a major role in the subsequent failure of the United States economy.

The Depression passed through to distinct stages. The first, which lasted from 1929 to 1931, was a period of reduced economic activity. In 1930 for example, industrial production was only 26 percent below its peak level of 1929. The second stage was much more severe; it lasted from 1931 until 1936. This stage was related not only to domestic events but also to serious financial problems in Germany, Austria and Great Britain that were induced primarily by a sharp decline in American investment, purchasing, and lending abroad. International commodity prices fell to absurd depth. Repercussions were severe in the United States, especially on agricultural prices and on banks with extensive foreign holdings. Some 2,300 banks with deposits of nearly 1.7 billion dollar failed in the United States in 1931.

It was an economic catastrophe. From 1929 to 1933 national income declined from 87.8 billion dollar to 40.2 billion dollar. More than 100,000 businesses failed. The number of unemployment swelled to 14 million by early 1933. Farm income, salaries, and manufacturing wages plummeted. The trauma of the Great Depression was devastating. Two to three million people moved from cities back to the country in the hope of being able to scratch a bare living from the soil. Family tensions multiplied, the number of marriages and birth declined, and poverty generally increased.

One of the most significant long-term impacts was the change that it brought in attitudes toward business and government. Loss of a popular confidence in the nation's business and financial leadership was almost complete by 1933. Lack of trust increased particularly after several investigations revealed the extent to which bankers had misused depositors' money and manipulated the stock market during the 1920s. Indeed, investment bankers, along with President Hubert Hoover, became the chief scapegoats of the debacle. Gradually, Americans began to look to the government for protection. By 1935 a majority of Americans finally concluded that the government should provide jobs for the unemployed whenever private businesses put unable to do so. The old system of relatively unregulated free enterprise had to give way to a new system of government intending to assure the successful functioning of the economy.