What Caused The Great Depression?
The Great depression is a very significant moment in the history of the United States. Very many banks did not thrive well in the months that came after the crash of the stock market of 1929. However, that was just a part of what happened. It is a very simplistic perception that cannot be taken as the only main cause of the great depression. Well, it is very interesting to learn the causes that led to such a downfall of the economy. The amazing story is the fact that the economy finally recovered from a contraction of that nature. This was the worst depression of the US economy ever. The causes were both a pull of both international and domestic causes. These are the major reasons documented as the causes of this hard-economic time.
The crash of the stock market in 1929 was one of the key causes of the Great Depression. It was not mainly the Great Depression as believed by some people but one of the causes. Those who held stock lost over $40 billion dollars. Another issue was the failures that were encountered in banks. In the 1930s, very many banks did not succeed. Bank deposits were not insured and therefore people simply lost all that they had saved in the banks. The only surviving banks were not sure of the situation and they too stopped to create other loans that led to less expenditure hence exacerbating the situation.
There was also a reduction in purchasing throughout the region and beyond. When the stock market crashed, people from all classes could no longer buy items. This finally led to a decrease in the production of products and ultimately a total reduction in the labor force. People lost jobs and could no longer pay for bills and items bought via installment strategies. As a result, owners took the items from them. Inventory increased the more while unemployment shifted upwards becoming a big challenge of alleviating the economic situation. The American economic policy in partnership with Europe that saw the imposition of high tax on imports led to less trade between foreign countries and America hence escalating the issue.
There were also drought conditions that largely contributed to the situation especially in Mississippi valley in 1930 that saw many people fail to pay debts and taxes. Ideally, the Great Depression caused uproar in the United States, something that had never been experienced before or even at this present age due to foreign policies, drought, crashing of the stock market, failure of banks and low purchasing power.
The Great Depression: The Extensive Effects The 1920s was a time of roaring prosperity. Even mid-October of 1929,the average middle-class American saw an “illimitable vista of prosperity” (). The thought of poverty was close to an end; in 1928, President HerbertHoover stated, “We have not yet reached the goal, but given a chance to goforward with the policies of the last eight years, and we shall soon with thehelp of God be within sight of the day when poverty will be banished fromthe nation” (). The prescience of the end of poverty became known as theAmerican Dream; however, this foresight was shortly lived. On Tuesday,March 26, 1929, the Hoover Administration saw the largest stock marketcrash of their administration to that date. Several months later brought BlackMonday, the largest stock market crash in American history and the cardinalcause of the Great Depression. The Great Depression is one of the singlemost important events in the financial history of the United States and theworld; the effects of and leading to the Great Depression lasted for severalyears. The Great Depression was an economic deficit with worldwide effectsthat began with the stock market crash of October 1929; the most profoundeffect of the Great Depression was the highest rate of unemployment inAmerican history: banks, factories, and stores closed, leaving millions of Americans jobless with no money. Without money, many Americans had torely on either the government or donations from charities to be obtain food;as the depression continued, however, the Roosevelt administration created