Unraveling The Great Depression: Causes, Impacts and Lessons

Explain the underlying causes of the Depression, and evaluate President Hoover’s attempts to help the economy. What are some lessons that can be learned from the Depression? Explain and support your answer. The Great Depression, is known as THE worst economic depression in the history of the United States, but it was not caused by just one factor, instead, it was a combination of domestic and worldwide conditions led to the Great Depression. The effects of the Great Depression were felt across the world, not only here in America but it was a direct cause to the rise of Hitler in Germany, leading to World War II. Here in America, there were several causes that led to the Great Depression. There was the chronic agricultural overproduction and

This was the rich got richer and the poorer got poorer effect. Then there was the investors ' speculation, where they were buying stocks with the belief that they could always be sold at a profit, they were counting their chickens before they hatched, I believe that this was the “rock that sunk the barrel” and caused the crash of wall street, and which is still being done today, and then the lack of action by the Federal Reserve System, who could have had some control of the crash, and by not deciding to raise interest rates but to merely warn banks to reduce the amount of money they were loaning, even though they were warned by others more aware of the danger, to raise the interest rate, but they didn’t listen, this with an unsound banking system, that made loans easy to get, and lending money to everyone for business activities, real estate, and investments in stocks and bonds. Banks just assumed the economic boom would go on forever, but after “the crash of the New York Stock Exchange on October 29, 1929”, many banks had to close their

All of the things mentioned above only got worse and this would last until 1941, when the U.S entered World War II. Hoover, “thought the crash was part of a passing recession”, but after the crash happened, he worked very hard trying to fix the economy. He founded government agencies, encouraged labor harmony, supported local aid for public works, fostered cooperation between government and business in order to stabilize prices, and struggled to balance the budget. His work focused on indirect relief from individual states and the private sector, with emphasis on “supporting each state effectively” with volunteerism and “appealing for funds” from outside the government, but as the Depression became worse, calls grew for increased federal intervention and spending. But Hoover refused to involve the federal government in forcing fixed prices, controlling businesses, or manipulating the value of the currency, all of which he felt were steps towards socialism. He was inclined to give indirect aid to banks or local public works projects, but he refused to use federal money for direct aid to citizens, believing the dole would weaken public morale. Instead, he focused on volunteerism to raise