What Caused The Great Depression

In 1929, the United States economy appears to be good and strong, at the moment; all Americans have some extra money or credit to buy some extra goods. The good economy was reflected in the Stock market, profits were big, more and more people invested in Stocks. In addition, farmers produced more wheat, cotton, corn, etc. and industries produced more goods that the needed to supply the country (over production), farmers’ and industries owners’ ambition make them produce more and more crops and goods. Americans using credit to buy goods they can’t pay, everyone investing all its savings on the stock market, overproduction on farm and industry area, plus America's new way of think, and other economic factors, make the economy of the country less strong, produce more unemployment and as result pushing the country into the Great Depression.

There are some main causes The great depression, first in 1934 per week They made $ 4.80 per week and They paid $ 3 by The incomes of Their Homes, all that happened to Birmingham Alabama in 1934, in Chicago everything rises for The men and The women for the food , And then spent $ 1.10 that was spent on food in stores, The three cases are The three cases were The financial downfall, low wages, and unemployment.

The stock market crash, called Black Tuesday. Unequal distribution of wealth was a key factor during the time period as well. The day know as “Black Tuesday” was the day the stock market crashed. This led to the fall of stock prices, in fear, people sold their stocks and gathered the money they could. The people who didn’t, lost all of their stocks. Those who bought them on credit, they were now in debt. Investors lost a collective amount equal to the amount spent in WWI, that’s billions of dollars gone, approximately thirty-two billion dollars (32,000,000,000). As bad as the crash was, unequal distribution of wealth did not help. The rich saw an income increase of 70%, and the poor saw an increase of 9%. More than 70% of families earned less than $2500/year. Many of these families couldn't afford household products, such as the flood of overproduced goods. Only one out of ten families owned an electric refrigerator. One thing many people overlook when on the subject of the Great Depression is the president's influence on the situation. The two presidents during this time were Herbet Hoover and Franklin D. Roosevelt. Hoover was in office during the collapse of the economy, he didn’t believe in national relief, he believed in self-prevalence and self-help. His beliefs didn’t get the confidence of the people, in 1933, a fourth of working American’s were out of a job, that’s more than fifteen million people unemployed. Many people disliked Hoover, so when they needed to make a home out of paper, glass, tin, or whatever they could find, they named the towns constructed from these items “Hoovervilles”. They were found mostly on the outside of cities. Hoover's idea of self-reliance didn’t get him reelected, he lost to Franklin D. Roosevelt in 1933. Roosevelt brought forward a new strategy to take on the economic problems, it was called the New Deal. The New Deal was a series of actions him and his

There was a great boom in consumer goods. Ordinary people were encouraged through advertising and could now afford to buy goods like cars, refrigerators, radios, and among other luxuries that became necessities. These new inventions made home life easier for women and more enjoyable for men. Also, there was this “mass production” method to produce many consumer goods. Assembly lines like, Henry Ford’s factory. Production costs fell quickly, wages rose slowly, and prices remained constant. For example, in 1908 the average cost of the car was $850, but by 1925 that cost had dropped to $290. Many people invested their money into businesses. Some, bought stocks sold on the stock market, when companies did well, so did

The causes of the Great Depression in the early 20th century is a matter of active debate between economists. Although the popular belief is that the main cause was the crashing Stock Market in 1929 caused the Great Depression, There were other major economic events that contributed just as much as the crash, such as American’s overextension of credit, an unequal distribution of wealth, over production of goods, and a severe drop in business revenue. As these events transpired the state of economic crisis in the US began to skyrocket.

Unemployment took a huge toll on America’s economy, it created a drought in the economy flow which made debt grow. Debt increased because of home mortgages and consumer credit, people continued to purchase things in loans from credit and they had to money coming in to pay it back (Doc 4). In retrospect the stock market was a bomb waiting to burst, it was the base of people buying stocks on margin and believing everyone would become wealthy by putting their money into the stock market (Doc 5 and 6). Eventually the banks asked for their money back and people went

Their influence was immense—socially, politically, and economically. Strong individuals accumulated much wealth and power. They lobbied for laissez faire government policies that left them free to maximize their profit with minimal government oversight. Mismatch between production and consumption was another factor that led to the crash of 1929. The 1920s made good progress in manufacturing and design techniques, particularly in ventures like cars. The generation line empowers economies of scale and incredible increments underway. Nonetheless, interest for purchasing costly autos and purchaser products were attempting to keep up. Therefore, towards the finish of the 1920s many firms were attempting to offer all their generation. This brought on a portion of the disillusioning benefit comes about which hastened falls in share costs. In 1929, there were at that point cautioning signs from the economy with falling auto deals, bring down steel production and a log jam in lodging development. Although all these signs were stated, people still went on to continue buying

By the time the NYSE closed, a record of 16,410,030 shares had been traded in one day. The average prices of fifty leading stocks had dropped 40 points a share. This meant that an investor who had bought a stock for $100 a share could only get $60 a share for it. (Feinburg B. Black Tuesday) By 1933, when the Great Depression reached its nadir, some 13 to 15 million Americans were unemployed and nearly half of the country’s banks had failed. Though the relief and reform measures put into place by Roosevelt helped lessen the worst effects of the Great Depression in the 1930s, the economy would not fully turn around until after 1939, when World War II kicked American industry into high gear. The American economy entered an ordinary recession during the summer of 1929, as consumer spending dropped and unsold goods began to pile up, slowing production. At the same time, stock prices continued to rise, and by the fall of that year had reached levels that could not be justified by anticipated future earnings. As consumer confidence vanished in the wake of the stock market crash, the downturn in spending and investment led factories and other businesses to slow down production and construction and begin firing their workers. For those who were lucky enough to remain

The prosperity of the 1920’s came to an abrupt halt when the stock market crashed in 1929. The cause of the Great Depression was triggered by a combination of reasons. Americans had been assured in their faith of a booming economy that they bought numerous items on credit. Ultimately the amount of products bought on credit reached an astounding $7 billion(4). With easy access to credit due to the government’s low interest rates, people had bought all of the new automobiles and radios without actually having the finances to pay for them. Beyond that, billions were poured into the stock market to make quick profit, which caused problems because it inflated the stocks to where they were selling for more than they were essentially worth. As if the stock market was not unstable enough, margin buying added to the danger of the stock market collapse because people were purchasing stocks with borrowed money. When the stock market collapsed, brokers demanded but were unable

Credit had become a popular habit. You could buy what you please as much as you desire only if you had an installment plan. This left no money for consumers to purchases other products. As time continues on October 29, 1929, the stock market crashed sending many into a panic. They are terrified which

Credit allowed average income families to purchase new products. However, the apparent success of the credit system did not conceal the damage it had imposed on the financial wealth of the United States. During the Roaring Twenties, the economy was booming at its highest. Families enjoyed larger paychecks for shorter work hours and days. New commodities were introduced to the consumer market. Even though wages were rising, a new economic plan, called credit, was instituted. Instead of direct buying, an initial deposit was required with weekly or monthly installments. People who could never afford new inventions such as radios, cars, or electric household appliances, were able to purchase these items on credit. The cultural divide between geographically separate areas was bridged through these new innovations. Through the radio, people all over the country were listening to the same songs and dancing the same dance Credit helped the economy by increasing the demand for domestic goods. But the success of credit masked the damage it had imposed on the economy. Credit began to have a negative effect on American families. Buying products on credit meant paying in installments. Soon families were unable to pay back the debts they owed. Another negative effect was buying stock on margin. Stock brokers began to buy stock on credit as well. The stock market peaked at its highest at this time after a period of wild speculation. Money was being heavily invested in the stock market without any regard for the invested company. Once the value of stock began to decline, investors began to sell all of their stock before the price hit rock bottom. The demand for stock was at its lowest and investors were left with nothing. On the other hand, margin stockholders were worse off and left bankrupt. Even margin investors sold their stock, the value had depreciated past the point to pay their debt

In the early 20s, there was an expansion of credit at the same time that taxes were being greatly reduced. This was the beginning of installment purchasing. Workers were not paid enough to

Uneven distribution of wealth serves as another cause of the Great Depression. America was wealthy in the 1920s, but this wealth did not extend to all segment of the society. The gains made by wealthy Americans in the 1920s far outstripped gained made by the working class. By the time of the stock market crash, the upper one percent of the population controlled over sixty percent of the nation’s savings. On the other hand, over three quarters of American families made less than $3000 a year. Problems that could develop from this situation were obvious. The bottom-line three-quarters of families were too poor to purchase much to help the economics to flourish. Underconsumption, in the long run, was a vicious circle to the economy. People had no money to spend. The income of many firms dwindled. More people were laid off or cut hours and thus further cut their spending. The economics became stagnant.

Many people think that the Great Depression was caused solely by the stock market crash. Anybody who tells you this probably didn’t pass U.S. History in high school. The fact is, the Great Depression was caused many different factors. Four of which were overproduction, uneven distribution of wealth, protective tariffs, and the four “sick industries” of the 1920’s.

There are various factors that led to the Great Depression. To begin, the lack of bank regulation was a big factor. The Federal Reserve Act which made banks have money on reserve, was not enforced. Another big factor was easy credit, Easy credit made it easy for people to get money out the bank without having the money to pay it back. Furthermore, the reduction in purchasing across the board can easily be said to be another key factor. With the stock market being down many people within every social class stop purchasing items. Which would cause a decreased not only the number of items being purchased but also the loss of people jobs. Many people had thing on layaway, so usually they would just pay for it monthly. However once they lost their