The Great Depression was the worst economic time in the United States because it affected the lives of millions of Americans. It was caused by many different things. It put many workers out of jobs and drastically increased the number of homeless people. Both banks and businesses failed. There were many ideas on how to fix the Great Depression, and liberals and conservatives and different ways of handling it. There were many different causes of the Great Depression. One of the biggest causes was the Stock Market Crash. Speculation eventually led to the market falling 12% because so many people were buying stocks to sell them for quick money. This made their price go up, making them cost more than they were actually worth, and soon no one wanted to buy them. When the stock market crashed , people rushed to the banks to get their money out. When a person puts money into a bank, most of it is loaned out to other people, and only a small percentage is kept there. So when people when to withdraw their savings they waited in long lines and only a lucky few got their money before the banks ran out. Overproduction and underconsumption also helped lead to the Great Depression. This is when the economy is producing more goods than people are buying. Companies then had to continue to drop their prices but people either had everything they wanted or couldn’t afford to buy the goods being sold. Companies failed or had to lay-off workers, increasing unemployment and further decreasing the amount of good being bought and money being spent. Over time, the gap in wealth widened. The middle class started using loans to buy more things. This money then went to wealthy business owners, and the middle class became more in debt. The government also played an important part in causing the Great Depression. Congress passed the Hawley-Smoot Tariff Act, increasing tariffs. They thought this would help protect American businesses but instead it caused a trade war. European countries increased their tariffs, stopping all trade and making it harder for companies to export their excess goods. The Fed increased the discount rate as well, making borrowing money a lot harder for businesses and people. As borrowing money became harder businesses continues to fail and more people lost jobs. After the stock market crash the economy was in very bad shape. As banks went bankrupt, many people lost all of their savings. Banks lent money to stockbrokers, to lend to individual investors to buy stock. When the stock market crashed loans couldn’t be paid back, and many Americans were in debt. As banks and businesses went under, many people lost their jobs. In 1929 before the crash, only 3.1% of Americans were unemployed. By 1933, 25% were out of jobs, a total of 13 million people. Without jobs, these people couldn’t pay their mortgage or rent so they were evicted from their homes. Underconsumption led to farmers having excess crops. They had to lower their prices to sell them, decreasing their property value. Some even lost their land. People faced many hardships during the Depression. Many people lost their homes so Hoovervilles were built all over cities. A loss of work led to an increase in hunger. Many people couldn’t afford food so they picked through trash, begged, or stole food. To help the need soup kitchens sprung up in cities. For money, people got creative. Some sold newspapers or apples, and other loosened drawers or even shined shoes. Many teens left home to find work because their families couldn’t afford to support them. Although there was a decrease in divorce rates, there was an increase in desertion rates. Men left their homes to live on
Causes of The Great Depression
Fundamental cause – contraction in spending i.e. aggregate demand.
Decline in production as inventory level at manufacturers and merchandisers increased.
Transmitted to rest of the world mainly through the gold standard.
Variety of other factors also fuelled the downturn in various countries.
Major causes are discussed here.
Stock Market Crash
Decline in output occurred in the U.S. during the summer of 1929.
Stemmed from tight U.S. monetary policy aimed at…
Unit 8 Ch. 30: The Causes of the Great Depression
Ch. 30 Vocabulary 1)
October 29, 1929; the worst day of
plunging stock market prices during the stock market crash that helped initiate the
a period in which stock prices are steadily
a situation in which more goods are
being produced than people can afford to buy
The Great Depression surprised lots of people since it followed such successful economic growth. Numerous historians argued over the causes of the Great Depression and whether this severe long-lasting financial collapse was inevitable. The maldistribution of purchasing power with weaknesses in the consumer demand had been one of the contributing factors to the Depression. Another cause was the credit structure of the country’s economy that lead to misleading mistakes. The debt structure also lead…
Bowl, 11:28). Since the Dust Bowl and the Great Depression overlapped, the nation was struggling. With the height of the Dust Bowl in 1934, socialism was the last thing on many farmer’s minds (Foner, 811). While farmers were leaving their homes, people in the cities witnessed and experienced the failing economy. The government uncovered that the lack of consumer demand was a fault in the cause of the Great Depression. In the hopes to correct the Depression, they tried resolving the problems with a…
Known as a Great Humanitarian and the great Engineer Herbert Hoover was blamed almost entirely for the Great Depression. Herbert accomplished much in life, but it was not an easy journey; his learning years went through the ups and downs that surfaced the path leading to his presidency, and he faced so many fears.
The past nine years he lived in a small town. His father Jessie Clark Hoover, a Quaker, experienced a heart attack and died when Herbert was only six years old. No later than three years…
lemoyne owen college
Explain and differentiate between the Great Depression of 1929 and the recession of 2008. What government agencies arose out of the Great depression and what are their roles?
Principle of Management BUAD 305
Dr. Catherine Causey
It is a common misnomer that people interchangeably use the words recession and depression. According to Investopedia, a recession is defined as a significant deterioration in activities across the economy. This decline in…
The New Deal addressed the issues caused during the Great Depression and helped the people who needed it which was the majority of American citizens. The New Deal recognized the causes of the Great Depression and put programs and acts in place to stop people from making the same mistakes. One of the main reasons people say that the New Deal was bad for America say that it increased government involvement in daily life to an extreme. The conservatives believed in personal responsibility and limited…
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Great Depression - Wikipedia, the free encyclopedia
This article is about the severe worldwide economic downturn in the 1930s. ...  Facing plummeting demand with few alternate sources of jobs, areas ..... By the late 1920s, the Federal Reserve had almost hit the limit of allowable credit that ..... The causes of the Great Recession seem similar to the Great Depression, but ...
1920s in jazz - Wikipedia, the free…
The Great Depression is probably one of the most misunderstood events in American history, and I’m going to be explaining what happened back when the Great Depression took effect on America. What started the whole Great Depression was the stock market crash, throughout the 1920’s the stock rose steadily which made it eventually take over and make the Great Depression have some major causes and effects to American people. Many Americans began to buy stocks and bonds; they also took advantage of the…
Goslin – Research Paper.
The Great Depression was a harsh global economic depression in the decade prior World War II. The Great Depression, while it happened far before the “Great Recession” of 2008, it can be greatly compared. During the Great Depression, all income, tax revenue, and prices dropped. International trade decreased by more than 50%, and U.S. unemployment climbed to just above 25%. Industrial cities like Detroit and Pittsburgh took the heaviest hits. While the recession of 2008…