How Did Overproduction Cause The Great Depression

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The most significant cause of the Great Depression was overproduction in the 1920’s. Factories and farms were producing more than people could buy. From that prices fell, factories closed, and workers were laid off. When prices fell, the economy started to collapse. Fewer places to work also created a small number of workers to produce money. In 1930, the unemployment rate for non-farm workers was 14.2% and it rose even more in 1933 at a rate of 37.6%. Over-production had a ripple effect towards America’s economy. The act of overproduction during the 1920’s was the greatest cause of the Great Depression. Companies were creating too much for people to buy resulting into a under-composition and a lower economy. In document 11: The Stumbling Block, over-production is shown when a man tripped over a bag titled “overproduction” and spills all his coins on the ground. Farmers tried to produce more food to increase their income …show more content…

Document 10 is warning the people to stop buying what they can’t afford with credit. When people first found about about credit in the 1920’s people went crazy for it. Not until their debts came back to their realizing they can't afford to pay the prices resulting into jail. When people realized they can’t buy anymore, work slacken and workmen were laid off. In document 4, a chart is shown of the U.S unemployment rates from 1926-1945. This chart shows how as farmer unemployment got worse, so did the non-farmers. In the 1920’s workers who worked in the city had more opportunities to find jobs unlike farmers who kept a more basic, traditional lifestyle. If farmers who produce food for factories couldn’t anymore, that meant workers would be laid off in the city and factories would shut down forever. In conclusion, overproduction was the biggest contribution to the Great Depression. It created other events such as debt, unemployment, poverty, and the end of

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