( Johnson, Deb ) The man that would follow in McKinley's footsteps was one of the most successful presidents in America's history. Theodore Roosevelt was truly a people's president. He fought the for the American people with exuberance, which gave the nation a president to be proud of. During the first The first decade of the 20th century the economy was very unpredictable. New industries such the auto and telephone began to spring up all across America.
Also, after World War 1, America took over as a leading producer as many European industries had suffered greatly because of the war. Government policies meant that businesses could thrive without government interference. World War 1 led to new markets being opened to America. This resulted in America developing new industries and new industrial ideas. These new industries meant that Americans believed that America was the most powerful country in the world.
(Source 6) After people started buying too many new things, a crash happened. There were many reasons why this happened. For example, people viewed the stock market as a short term investment instead as a large one. The boom was enormous and the crash itself was huge. The Great Depression lasted in the 1920s and was the biggest one in Americas history.
This paper will look at the Austrian School of thought regarding the causes of the Great Depression and look at how the same mistakes are being made today. According to the Austrians, each depression follows a “boom-bust” cycle caused by multiple errors in economic decision-making. Rothbard explains these common features as a “cluster of errors.” The “boom” of a depression is a time of wasteful investment. This is caused by banks loaning out money at too high a rate. As newly acquired funds pour into businesses, businesses believe the supply of funds for investment has greatly increased and the interest rate falls.
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 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.
The U.S. trade was flowing steadily. Manufactured goods and raw materials were being exported at an impressive rate. Technology in America was also becoming increasingly advanced. The main causes of the Great Depression had less to do with the stock market crash, and more to do with selfishness and purchasing stocks on margin. The weak system had put on quite an impressive and deceiving mask—that mask suddenly dissolved.
Modern industry had the ability to produce vast quaunties of product, but this created a huge problem with because the demand of these good was beginning to decline and there was a surplus of goods that merchants had to sell without profits. There was a one economic problem and that is that income was not distributed evenly to everyone. The amount of money going to the wealthiest was getting larger as the decade proceeded. To factors caused this problem. First the company showed outstanding gain in productivity, but the workers got received a small percentage of the profit.
Not only were American families buying these new trinkets but they also started purchasing stock in companies at an increased rate. A commodity that was available before the war but not readily accessed, now became as high as seven million Americans buying and owning company stock after the First World War. With the purchase of automobiles, washing machines, and stock families were still not making enough to keep up. Even though the wage market had increased, the need for fancy things made it almost impossible for a family to have enough money left over to survive. This demand for the goods but not enough money produced a technique used by manufactures to bring in more customers, consumer credit.
Even though some ideas The Founding Fathers fabricated where not in effect today anymore, they help America grow the way it is now. They made a great impact with The Constitution, Bill of Rights, and The Federalist Papers although many things changed the will of their ideas that kept going. Now America is a country with a big population with multicultural people with a very powerful stable central government. We owe this to our Founding Fathers whose ideas and ideal have traveled through time and make us the best government there is. If The Founding Fathers could see the fruit of their hard work which is this country, they would be proud of what they did.