The Great Depression in America

Powerful Essays
The Great Depression was a huge economic downfall in North America and involved many other industrialized countries of the world. The Depression began in 1929 and lasted for about ten years. Millions of people lost their jobs along with many businesses going bankrupt. The common misconception of the Great Depression is people think that the stock market crash was the main cause for it. There were many causes for the Depression; unequal distribution of money during the 1920’s was the main cause of the Depression. This unequal distribution happened on many different classes of people. The imbalance of money is what created such an unstable economy. The stock market was doing much worse than people thought during this period. This lead to the biggest stock market crash in our history. The misdistribution of wealth and the stock market crash caused the economy to plummet (Modern).
The stock market was bigger than ever in the 1920’s. Prices reached levels that people never dreamed of. At one point when the market was roaring in September 1929 forty percent of stock market values were pure air. This meant that investors thought that the stock market would go up because it had been going up. By 1928 and 1929 the Federal Reserve was worried about the high level that the stock market had reached (Galbraith 116). The Federal Reserve feared that the stock market might burst suddenly. If this did happen investment might fall, parts of the stock market might not be able to pay back debts, and even worse recession might result (Galbraith 118). The Federal Reserve in 1928 tried to make borrowing money for stock speculation more difficult and very costly by raising interest rates. All of the options that the Reserve tried had unfavorable risks associated with them. Many economists believed that the Federal Reserve was responsible for the recession. The stock market did crash on October 29 1929. The Federal Reserve tried to do to much to stop the recession and in return brought on the recession that they were trying to stop (America).
When the stock market crashed in October this day was known as “Black Tuesday.” On this day Americans saw their stocks lose a tenth of their value. The exact reason for why the stock market busted on this day are unknown (Delong 1). The stock market cras...

... middle of paper ...

...t of 1935, which raised personal income taxes on the highest income levels (America).
On December 8, 1941 the U.S. Senate issued a declaration of war on Japan. Germany declared war on the United States on December 11, 1941. Industrial factories were at first slow to convert into making military machinery. By 1942, 33 percent of the economy was devoted to the war effort (Modern). This gave society a sense of patriotism and devotion to one’s country. Between 1941 and 1945 the United States spent about $250 million a day in order to defeat their enemies. Federal spending was more than $320 billion over that period. That was two times as much money as the federal government had spent in its entire history up until that point. This government spending stimulated an industrial boom and stopped unemployment. By the end of the war in 1945, the farmer’s income had more than doubled. Corporate profits rose by 70 percent and the wages of the employees increased by over 50 percent. The most interesting statistic was that the earnings of the bottom fifth of workers rose to 68 percent. The Great Depression soon came to an end being swept away by the war (America).
Get Access