Though the laissez-fare policy was a huge contributing factor, it could have been the sole factor for the stock exchange collapse as its policy of not interfering caused lots of problems. As a result the US went into the one of the worst economic downfalls the world has ever had. There were numerous domestic and foreign economic policies and beliefs put in place by the Republican government to try and better America. In the end most of these were causes of the depression. The government was trying to isolate America from the rest of the world so they passed the Fordney-McCumber Act (1922) and the Smoot-Hawley Act (1930), both of which imposed high import tariffs (taxes) on all good being imported into the US.
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.
The Great Depression is probably one of the most misunderstood events in American history. It is routinely cited, as proof that unregulated capitalism is not the best in the world, and that only a massive welfare state, huge amounts of economic regulation, and other interventions can save capitalism from itself. The Great Depression had important consequences and was a devastating event in America, however many good policies and programs became available as a result of the great depression, some of which exist even today. When the stock market crashed in October 1929, the nation plummeted into a major depression. An economic catastrophe of major proportions had been building for years.
Germany's Rise From Bankruptcy to a Superpower Between 1929-1939 1929 was a hard time for Germany. Hyper inflation had taken control, the Reich mark was worth nothing, and they were literally bankrupt. The reason for their bankruptcy was due to the economic collapse of America. After world war one Germany had been made to pay large reparations to France for the damage they had caused. Germany had problems paying these large reparations and called in America for help.
The weak system had put on quite an impressive and deceiving mask—that mask suddenly dissolved. Swiftly smothering the economy was a depression, a depression that slaughtered the American Dream. The weakness of Europe was an advantage of American businesses, leading them to make massive investments in Europe (“Great”). The investments eventually led to the international financial structure being almost entirely dependent on U.S. businesses and banks (Mcelvaine).The prosperous 20s soon halted to end due to the uneven distribution of income across the nation. Wages increased only slowly, leading to an increase in the use of credit (“Great”)... ... middle of paper ... ...sues (suicide & domestic violence), unemployment, homelessness, and the collapse of the European economy.
Big banks were in trouble as well, many investing recklessly in the stock market then losing it all when the stock market crashed in 1929. The fourth factor was Americas position in the international trade market. In the late 20's, Europe's demand for American goods began to decline, partly because their industry was becoming more productive and partially because their economy was destabilized from the international debt structure that emerged in the aftermath of WW1. The international debt structure was a fifth and final factor contributing to the Great Depression. At the end of the war in 1918, all the European nations that had been allied with the US owed large sums of money to American banks and could not repay them with their shattered economies.
With the ravages of world war one many countries where in debt in post war world one or became in debt due to reparations. It has been said that the Great Depression began in 1929 after a cataclysmic collapse of the New York Stock Exchange. It began in the United States but quickly spread across the world causing an economic slump. “During the collapse of the world the German case is perfect example of what happen virtually everywhere in the 1930s. The international economy broke up into trading blocks determined by political allegiances and currencies.” Britain’s economy suffered with the loss of the over seas market and the country’s choice to not to devalue the pound.
In response to this slump, the Government tried to stabilise the British economy by reintroducing the Gold Standar. Unfortunately they overestimated the value of currency by 10%, increasing the problems of an already unstable British industry. The British mining industry suffered an economic crisis in 1925. This was largely caused by the fall in prices resulting from the import of free coal from Germany as reparations in the aftermath of World War I. The loss of foreign markets and the fall of world commodity prices and the decline in the competitiveness of British coal in foreign markets due to the Gold Standard led to poor relations between mine owners and mine workers.
To try and end their suffering, the German government printed more money, which in turn caused inflation and more problems. When the Great Depression hit Germany in the early 1930’s the German economy was in horrible shape. Many Germans were left unemployed, homeless and practically hopeless. The depression just added to German debts and despair. These economical conditions in Germany created a perfect scenario for Hitler to gain power and influence(Heck 124).
The International Financial Crisis in 1929 Throughout the 1920's in Britain there were economic problems. Unemployment was increasing; therefore there was low domestic demand and large amounts of poverty. Markets were also being lost abroad, leading to a decrease in trade. However in 1929-31 these problems reached crisis point, when in 1929 The Wall Street Crash called for an end of American Loans to Britain, and the re-call of all Britain's debt. This had impact worldwide, as prices for goods slumped due to lack of demand and business confidence disappeared.