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The cause of the depression in the United States
The cause of the depression in the United States
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Causes of the Great Depression
Many people think that the Great Depression was caused solely by the stock market crash. Anybody who tells you this probably didn’t pass U.S. History in high school. The fact is, the Great Depression was caused many different factors. Four of which were overproduction, uneven distribution of wealth, protective tariffs, and the four “sick industries” of the 1920’s.
After World War I, new technological improvements helped factories to produce higher quantities of goods using smaller amounts of employees. Fewer workers meant less money being redistributed to the consumers to purchase products. America didn’t have a necessity for this higher quantity of goods with less people receiving paychecks. Thusly, the age-old system of supply and demand began to wither because there were too many products with too few people who could afford them.
In 1922, the average weekly earning for most people was about 22 dollars. Because of this uneven distribution of income, families couldn’t afford to buy most products. Businesses suffered additionally because they had trouble selling goods. Most profits that could have been put into employee’s salaries went to shareholders or back to the business itself. If the workers had higher wages, they would be able to purchase goods and thus help the economy.
In 1930, congress passed the Hawley-Smoot Tariff Act, which created the highe...
During 1928, the stock market continued to roar, as average price rose and trading grew; however as speculative fever grew more intense, the market began to fall apart around 1929. After the stock market crash, a period began that lasted for a full decade, from 1929 to 1939, where the nation plunged into the severest and the most prolonged economic depression in history - the Great Depression. During this inevitable period, the economy plummeted and the unemployment rate skyrocketed due to poor economic diversification, uneven distribution of wealth and poor international debt structure.
There were many causes for the Great Depression. The first and one of the largest was the stock market crash. Before 1929 the stock market was flourishing and everyone wanted to buy stocks. People were so confident in the stock market that they were buying “on margin”, which meant that brokers would lend them 10% of the money they invested (D1). The problems began when stocks were being over speculated. When people began to realize this, they began selling there shares. On October 29, 1929, 16 million shares were sold (D9). This day became known as “Black Thursday”, the day the stock market crashed (D12). The second reason was the overproduction of goods. Factories had already produced too many goods and now there was no demand for them. The government began to raise tariffs to protect Canadian industries but things only led downhill from there.
Some say that the great depression was caused partially by social democracy and planned economies. And although this could be true, it originally started from debts from World War I, and of course the stock market crashing in 1929.
The causes of the Great Depression of the 1920's and 1930's has been argued about for generations. Most people agree on several key topics and that it was the severity and length of time the Depression lasted that was actually the most remarkable. Hoover made many noteworthy attempts to try and solve this crisis, yet in the end it was President Roosevelt and his "New Deal", that brought many Americans hope for the future.
In the real world, life has its ups and downs. In the 1920's, corporations started to take better care of their workers than they had in the past. Workers were paid higher wages and worked shorter hours. With more time and money on their hands, workers turned into consumers, which caused an increase in the production of consumer goods. One of the most popular consumer goods was the automobile. To keep up with the high demand, the automobile industry had to create a way to make a lot of cars in a short amount of time, at a low price. The solution was the assembly line. With the assembly line the time to create one car dropped from 12 hours to 90 minutes. The price of the automobile fell greatly also, which further increased the demand. The automobile industry inspired other industries to form, such as the steel, rubber, petroleum, machine tools, and road building industries. But life wasn't just peaches and cream in the 1920's. Immigrants and farmers were facing some serious adversity. After World War I, the United States began to put a cap, or put a quota, on how many immigrants could come into the country.
The Great Depression was in no way the only depression the country has ever seen, but it was one of the worst economic downfalls in the United States. As for North America and the United States, the Great Depression was the worst it had ever seen. In addition to North America, the Depression greatly affected Europe and other various countries throughout the world significantly during the 1920’s and 1930’s. The Great Depression was caused by the collapse of the Stock Market, which happened in October of 1929. The crash exhausted about forty percent of the paper values of common stocks. It was the worst depression due to the fact that at the time of the Great Depression the government involvement in the economy was higher than it had ever been. A unique government agency had been set up exclusively to prevent depressions and their related troubles for instance bank panics. All of ...
With World War II bringing thousands of men back to America seeking new lives and opportunities, the US experienced an economic expansion like it had never seen before. During the middle of the twentieth century wages increased 22%, family income went up from $3,000 to $5,400, and the Gross National Product increased from $206 billion to $440 billion. In order for the country to meet the demands of the massive consumptions of the American people, industries had to expand and create more efficient ways of selling there products through advertisements, which as a result provided citizens with more job opportunities.
It is said that the cause of the catastrophic stock market crash known as the great depression was due mostly to uncontrolled political and industrial systems otherwise known as capitalism. However, the timeline leading up to the Great Depression proves that many other factors played a role in the stock market crash that occurred in the decade of the 1930's. So lets take a look at rather four, factors contributing to the great depression that we will further discuss in the following paragraphs. Four of the main causes that led up to the great depression were unequal distribution of wealth, uncontrolled political and industrial systems, high tariffs and war debts.
The Great Depression was the longest American slump in the economy to ever occur. The Great Depression lasted for about a decade between 1929 and 1939, the dates of the Stock Market Crash of 1929 and the starting of World War II. A number of factors actually caused the Great Depression. One commonly known factor said to have caused the Great Depression is the Stock Market Crash of 1929, although this is not directly correct. The market crash was only a symptom of, as well as a transition into, the Great Depression. Other symptoms and causes includes, wealth inequality, overproduction, stock speculation, excess loaning, deflation, unemployment, and no profits.
Most Americans began to live a better life from 1922-1929 otherwise known as the seven fat years. This was due to the government’s relaxed approach towards the economy. The laissez-faire system was encouraged because there was little intervention from the state. Businessmen didn’t have to listen to government they could make their own decisions in order to produce profit and wealth. Government’s approach was pro-industry and anti-labour which meant that there was no protection for the workers thus leading to inequality, long working hours and not a enough pay for the workers to really feel happy or satisfied. Powerful monopolies were able to grow unchecked. Although the laissez is a reason for the crash it isn’t the only one reason. It can be argued that the economic isolationism, loans to Germany and other countries and unequal wealth and income etc. were the causes of the crash because America had many more influences than government not intervening and they were involved with a lot of things and people and would come out on the other side biting more than they could chew during the depression.
The Great Depression was marked by the Stock Market crash, but in reality, its origins were able to be traced back to World War One. Many actions by the U.S. government, done to boost the economy, worked temporarily and gave America a period of great economic success. During this time, many underlying problems were ignored, and actions done to protect the U.S. economy, eventually ruined it. The Great Depression was not something that could have started as a result of one action, but it was a result of more than a decades worth of actions.
During the years of 1914-1918 was “the greatest wars to end all wars” known as World War I that jumpstarted our journey towards the Great Depression. In this war it involved fighting in between nations, alliances, imperialism, militarism, nationalism, and assassinations. After all this fighting came the Roaring 20s. The Roaring 20s was a time period when many people defied prohibition, indulged into new styles and art, and the economy was at an all time high. Now imagine having a luxurious mansion and you leaving your family at home to go to work at your fancy job. Then you come home that evening and you’re all of a sudden broke. Unreal right? Well this was what happened to many families on October 29, 1929 when the stock market crashed and the Great Depression started. United States economy took a turn for the worst and brought about devastation which resulted into problems for the American people/government and them having to deal with it in different ways.
There have been many issues that caused the stock market to crash. One major effect on the Great Depression was the current state of agriculture. The effect from both the Dust Bowl drought and the Great Depression made it hard on farmers in the early 1900’s; it was hard for farmers to produce crops (“The Ultimate AP US History”). Farmers with small businesses were forced to end their profession because of the new economic climate. As the farmers left the business of agriculture, there was less crop to sell the country (Pettinger). With the drop in prices after the war, it was difficult for farmers to stay current with loan payments (Romer and Pells).
Although, the growth of business was booming and consumption was extremely high during the 1920’s employers failed to equally distribute the benefits to its industrial workers who got the short end of the stick and did not see any profit from productivity. Since there was no law at the time established on how many hours a person was to work and get paid, employers would overwork and underpay the laborers. This became a major problem because it brought about high unemployment rates, which for laborers, the shortage of jobs meant strong competition among each other for finding and keeping a job, and low wages, which brought down consumption.
The 1920s were a period of economic growth and change. Real wages for most workers increased while stock prices increased as much as they had in the previous three decades; for the first time, 2,500, the majority of Americans lived in cities and towns. The appearance of current medicine permitted child mortality rates to decline significantly among the rich, but fewer other Americans appreciated regular admission to physicians.