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The Great Depression in America

Powerful Essays
There were many primary causes for The Great Depression, Unequal distribution of money to the economy, and the stock market speculation, and much more which all played a major factor for The Great Depression. The Great Depression impacted everyone, it impacted different people of all kinds of backgrounds. It was a low time for Americans in the 1920's, and for other countries also. One of the causes were Uneven Prosperity, 0.1% of families made 100,000$ a year, and 80% had zero savings. 200 companies controlled 49% of all U.S industry which caused uneven prosperity. Although the economy was booming in the 1920's most purchasing was done by credit. U.S wealth was not spread evenly and the economy was unstable. The U.S. economy was booming in the 1920’s and Uneven prosperity made recovery difficult. People were buying thousands of shares of stock for as little as 10% down. Then people lost ten times as much as they put in.For the economy to function properly, total demand must equal total supply. In the 1920's there was an oversupply of goods. 60 percent of cars and 80 percent of radios were bought on credit. The U.S. economy was also reliant upon luxury spending and investment from the rich to stay afloat during the 1920's. The significant problem with this reliance was that luxury spending and investment were based on the wealth's confidence in the U.S. economy. imbalance of wealth lead to large market crashes. Black Tuesday, 1929. People saw stocks were actually falling. People hurried to get out of stocks and minimize their losses. As this happened, more people did the same which exacerbated the situations. On Black Tuesday, a record16.4 million shareds were sold. This led to bank failures. Many people lost as much as ten times their initial investment in the crash of Black Tuesday Speculation in the 1920s caused many people to by stocks with loaned money and they used these stocks as collateral for buying more stocks. The stock market boom was very unsteady, because it was mostly borrowed money and false optimism. When investors lost confidence, the stock market collapsed, taking them along with it.People loss confidence and since they were developing mistrust of the economic situation, many wanted there money out of banks and buried in their yards. The same thing that happened to the stock market. Banks ran out of cash an... ... middle of paper ... ...his programs aimed at stimulating business recovery were 'too late.' His hesitation to initiate government action gave the economy time to spiral further downward and for his relations with the leaders of big business to sour. The RFC, Hoover's only major attempt to aid the recovery of business and finance, pumped much needed capital into the economy, but it was little more than a bread line for business, according to its critics. The RFC simply gave handouts to businesses, rather than taking a role in shaping the ways in which those funds were used. Hoover eschewed direct governmental intervention under the principle of small government and free market economics. The experience of American citizens during Hoover's term left them desiring something new from the government. The nation demanded intelligent and effective governmental intervention to revive the flailing economy. They demanded a president who would be a hero and representative of his people rather than an aloof, uncompassionate bureaucrat--a departure from the do-nothing presidents of the 1920s. Franklin Roosevelt, elected in 1932, strove to answer this call during the remaining years of the depression.
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