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causes of the great depression flashcards
the great depression ap world history
causes of the great depression flashcards
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The Great Depression
During the 1920’s America was experiencing great economic growth. As WWI was ending Americans were out of energy. For almost 100 years they had been facing the problems of sectionalism, civil war, reconstruction, imperialism, and WWI. By the end they were ready to just sit back and party. Demand sky-rocketed and brought great economic growth. Americans failed to see the great problem looming overhead though. The Great Depression was caused by a combination of factors- a natural slowdown of the business cycle, weaknesses of the 1290’s economy magnified the slowdown, the republican response failed to help, a great environmental disaster, and the collapse of the world economy all contributed to the cause of the Great Depression.
In 1929 the American economy began to slow down. It is a natural part of the business cycle in which all industrial nations experience. There are times when demand is high and the economy grows, but then once people have the things they want demand goes back down and the economy slows down. Usually the economy goes up again after a few years, but in 1929 the slowdown exposed many weaknesses of the 1920’s economy.
The 1920’s economy had a good number of problems which magnified the slowdown of the economy in 1929. First was that there was very little economic diversity as a few large businesses dominated in the economy and when they started going down they dragged everyone along with them. Second was that there was a large stratification of wealth in which 1% of the population owned about 59% of the wealth. Businesses did not increase wages during their great prosperity in the 1920’s so when the economy began slowing down millions of average workers did have a sufficient amount of ...
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...ep the economy together wasn’t working very well. France and Britain were harsh in deciding the reparations Germany would have to pay, way more than Germany could possibly pay right after a huge war. So the U.S. created the Dawes plan in which businesses would loan money to Germany so they could pay Britain and France so that those two could pay the U.S. back. Germany was unable to keep up with payments though and their economy collapsed which led to Britain and France’s economies falling apart. This broke down international trade even further and cut the U.S. short of a lot of money. That is how the collapse of the world economy was a factor in causing the Great Depression.
By themselves these independent factors would not have been enough to cause the Great Depression. As they compounded though, it turned a natural recession of the economy into a Great Depression.
The stock market crash of 1929 is the primary event that led to the collapse of stability in the nation and ultimately paved the road to the Great Depression. The crash was a wide range of causes that varied throughout the prosperous times of the 1920’s. There were consumers buying on margin, too much faith in businesses and government, and most felt there were large expansions in the stock market. Because of all these...
The 1920s were known as carefree and relaxed. The decade after the war was one of improvement for many Americans. Industries were still standing in America; they were actually richer and more powerful than before World War I. So what was so different in the 1930’s? The Great Depression replaced those carefree years into ones of turmoil and despair.
The symptoms of the Great Depression began since the World War I and the economic boom of the 1920s, which was built on a shaky foundation. As a result, the Great Depression remained inevitable due to poor economic diversification, uneven distribution of wealth and poor international debt structure. However, although the Depression shook much of American society and culture, the capitalist system survived, the American people remained receptive and the belief in the "American way of life" didn't falter throughout the long years of economic
By 1929, the U.S. economy was in serious trouble despite the soaring profits in the stock market. Since the end of WWI in 1918, farm prices had dropped about 40% below their pre-war level. Farm profits fell so low that many farmers could not pay their debts to the banks; in turn this caused about 550 banks to go out of business. The nations illusion of unending prosperity was shattered on Oct. 24 1929. Worried investors who had bought stock on credit began to sell it. A panic developed, and on October 29, stockholders sold a record 16,410,030 share. By mid-November, stock prices had plunged about 40%. The stock market crash led to the Great Depression, the worst depression in the nation’s history (until…2014 ☺). It was a terrible price to pay for the false sense of prosperity and national well being of the Roaring Twenties.
What was the immense hardship that America had to face in the late 1920’s and 1930’s? If you guessed the Great Depression, then you are correct! There had been many depressions in U.S history but, the depression between 1929 and 1939, had significantly affected the American lifestyle. This Great Depression was caused by bank failures, individuals stopped purchasing items, the dust bowl, and the decrease in foreign trade. The Presidents during this timeframe were Herbert Hoover and Franklin Delano Roosevelt. They both had their strategies to get America out of the depression.
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.
The occurrence of the Great Depression was an inevitable economic disaster that was caused by a variety of reasons and events that happened in the U.S. and across the world. The lack of diversification was one of the main causes of the Great Depression as the dependence on only certain industries like the automobile industry began years before; and because of the prolonged success of such industries, their demise could not have been predicted. World War I was an event that had a major impact on the Great Depression because of the complexity of the international debt owed to the U.S, and the decline of international trade. In addition, the failure of the bank system and the reckless investments that banks, businesses and the American public made contributed to the manifestation of the Great Depression.
Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA. However, in order to stop increasing prices of Stock, the Federal Reserve raised the interest rate sof loanabel funds which depressed the interest sensitive spending in many industries and as a result a record fall in stocks of these companies were seen and ultimately the stock bubble was finally burst. The fall was so dramatic that stock prices were even below the margins which investors had deposited with their brokers. As a reuslt, not only investor but even the brokerage firms went insolvent. Withing 2 days of 15-16 th October, Dow Jones fell by 33% and the event was referred to Great Crash of 1929. Thus with investors going insolvent, a major shock was seen in American aggregate demand. Consumer Purchase of durable goods and business investment fell sharply after the stock market crash. As a result, businesses experienced stock piling of their inventories and real output fell rapidly in 1929 and throughout 1930 in United States.
Laissez-faire in the 1920s created an economy filled with inequality. While manufacturing, finance and services all enjoyed high times, agriculture and energy struggled throughout the decade. Despite the fact that the economy itself was structurally flawed, the stock market would go through the roof. Phenomenal economic growth was centered in only two industries: construction and automobile manufacturing. Even these industries would begin shrinking in the year before the stock market crash. For most of the 1920s the economy grew along with capital facilities. But by the time the stock market crashed, there was so much plant space producing so many goods that the backlog of inventory was three times greater than normal. Half of America was living at or below the minimum and could not afford to buy these products. As a result of this drastic economic change, the government was forced to look past laissez-faire and interfere with the publics marketing operations with the intent of improving the economic
October 29th, 1929 marked the beginning of the Great Depression, a depression that forever changed the United States of America. The Stock Market collapse was unavoidable considering the lavish life style of the 1920’s. Some of the ominous signs leading up to the crash was that there was a high unemployment rate, automobile sales were down, and many farms were failing. Consumerism played a key role in the Stock Market Crash of 1929 because Americans speculated on the stocks hoping they would grow in their favor. They would invest in these stocks at a low rate which gave them a false sense of wealth causing them to invest in even more stocks at the same low rate. When they purchased these stocks at this low rate they never made enough money to pay it all back, therefore contributing to the crash of 1929. Also contributing to the crash was the over production of consumer goods. When companies began to mass produce goods they did not not need as many workers so they fired them. Even though there was an abundance of goods mass produced and at a cheap price because of that, so many people now had no jobs so the goods were not being purchased. Even though, from 1920 to 1929, consumerism and overproduction partially caused the Great Depression, the unequal distribution of wealth and income was the most significant catalyst.
The beginning of the 1920s was a period of prosperity for most Americans. “The years between 1920 and 1929 are sometimes known as the “Roaring Twenties” or the “Jazz Age” (Bingham 6). World War I had ended and Americans were looking at an economic boom. “When World War I ended, American soldiers expected to reap the benefits of the productivity and prosperity the war had brought to the United States. But the sudden decrease in demand for the exported food and wartime goods brought on by the war’s end did not result in a corresponding reduction in production levels” (George 14). Americans were buying cars and new products, for example vacuum cleaners and refrigerators that were rolling off the assembly lines. This period in time was also called the “Coolidge Prosperity”, named after President Coolidge who was the U.S. President from 1923 to 1929. There were problems starting to occur during this time but most of the Americans
The booming economy of the 1920's led to the Great Depression. It affected almost all of the industrialized world. The main cause of the depression was because of the unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The mal-distribution of wealth in the 1920's existed on many levels.
The speculation and the resulting stock market crash acted as the trigger for the already unstable United States economy. Due to the maldistribution of wealth and the unstable economy of the 1920’s, the nation headed into a decade of trouble. In response to its economic difficulties, the United States set up even higher trade barriers with other nations, causing more trouble within the nation. Many of the working class lost their jobs, and since these people did not have savings, they were in big trouble. Unemployment grew to 13 million by 1932 as the country quickly spiraled into a catastrophe. The Great Depression had begun due to the maldistribution of wealth, a bad economy based on over confidence, and the irresponsible erratic of the “bull” stock market.
The Great Depression began in October 1929, when the stock market in the United States dropped rapidly. Thousands of investors lost all of their of money and were forced to live on the streets often going without food. This crash led into the Great Depression. The ensuing period of 10 years ranked as the worst period of high unemployment and low business activity in modern times. Banks, stores, and factories were closed and left millions of Americans jobless, homeless, and without food. Many people came to depend on the government or charity to provide them with food. The Depression became a worldwide business slump of the 1930's that affected almost all nations. It led to a sharp decline in world trade as each country tried to protect their own industries. The Depression led to political turmoil in many countries such as Germany where poor economic conditions helped lead to the rise of Hitler. Franklin D. Roosevelt was elected President in 1932 and his 'new deal' reforms gave the government more power and helped slow the depression. The Great Depression ended as nations increased their production of war materials at the start of World War II. This increased production provided jobs and put large amounts of money back into circulation. Several factors led to the great depression. One being the lack of diversification in the American economy. The prosperity of America had been basically dependent on a few industries like construction and the automobile and in the late 20's these industr...
America's unevenly distributed wealth played a role in the stock market crash and slowed the recovery. During the "Roaring Twenties" our country prospered tremendously, but our middle and lower class prospered little compared to the upper class. The upper class profits sky rocked and the distance between the classes grew out of control. In 1929 the top .1% had a combined income equal to the bottom 42 percent (2). Much of the money was in the hands of a few families who saved or invested rather than spent their money on American goods causing a greater supply than demand. Three quarters of the population maded just enough to purchase consumer goods. They relied heavy on credit to make purchases and had no savings to protect them (5). By 1929, some 200 corporations controlled over half of all American wealth (2). Most of the industries that were prospering and using their profits to improve manufacturing to the point by the market crash they were supplying more than the demand. Before the depression successful companies were ...