| What Caused the Great Depression? |
What Caused the Great Depression?
The Great Depression was a global phenomenon that significantly changed the course of
history. In America, people lost their life savings when banks collapsed. The severe
decline in US capital triggered economic troubles overseas. The resulting German
poverty ultimately contributed to the rise of Nazism and World War II! What sparked the
world-changing Great Depression?
Historians cite many contributing factors. Most agree that the downturn began with the
US stock market crash of 1929. Throughout the 1920s, rapid economic growth and
industrialization had been accompanied by easy lending. There was a vast amount of
unsecured consumer debt. But in October of 1929, the prosperity and optimistic
speculation of the "roaring twenties" suddenly collapsed. A Black Thursday on Wall
Street was followed by a Black Tuesday, and investors quickly lost $40 billion! Many
had invested their life savings and mortgaged their homes.
President Herbert Hoover failed to realize that his nation's economy could collapse; he
believed he was witnessing a mere recession and said the market would naturally recover
within a couple of months. He refused to establish a federal unemployment program, and
he dismissed public construction projects as "progressive ideas" that wouldn't improve
the economy. Hoover was a sort of "trickle-down" theorist who was inclined to support
businesses before unemployed individuals. He tried to protect American companies with
the Hawley-Smoot Tariff, but by reducing trade he only worsened the faltering American
and global economies.
When the American economy sputtered to a standstill, others suffered through
association. America had been an important trade partner for England, France, Germany,
Japan, Argentina, and Brazil. These countries suddenly saw sharp declines in demand for
their products. Also, all of the countries' currencies were linked through their adherence
to the gold standard. Virtually every industrialized nation suffered wholesale price
declines of 30 percent or more at the start of the Depression.
The 1930s were particularly harsh for farmers in the United States. In the Great Plains,
the Depression was worsened from 1933 to 1939 by a severe drought and dust storms.
Unable to produce crops, farmers lost their farms and banks seized their homes. Farm
families were reduced to living in shantytowns, which Hoover's critics called
Hoovervilles. These farmers and other destitute citizens turned to bartering for basic
goods in the absence of cash.
Farmers' losses increased bank failures in rural areas, and urban bank failures had already
been escalating rapidly. When stock investors lost their capital, banks started to fail at ten
times the 1920s rate. Nine thousand banks failed during the 1930s. And when banks
failed, customers lost their savings! By the end of Hoover's term in 1933, Americans had
$140 billion missing from their accounts. The bank failures limited new enterprise and
growth across the country. Banks started to limit how much money customers could
deposit, and loans became scarce. Hoover was not about to win a second term.
After Franklin D. Roosevelt was inaugurated in 1933, he instituted a bank holiday. Banks
would rest for several days while Congress passed the Emergency Banking Relief Act to
stabilize the banking system. The new President told his nation, "The only thing we have
to fear is fear itself."
Roosevelt tried to end the Great Depression by creating dozens of government agencies
to support the people. Unemployment fell by two-thirds during his first presidential term.
If it weren't for his programs, surely many more people would have died from starvation
and lack of shelter. Still, daily life remained precarious for most Americans until the
depression ended six years later with America's involvement in World War II.
PPPPP
(word count 597)
|
Causes of US Involvement in World War II Following World War I, the United States adopted an isolationist stance. Starting ...
read more
Chinese Immigrants and the Iron Road On a bright May day in 1869, railroad workers, businessmen, and government officials gathered ...
read more
Deep Throat and his Legacy In the pre-dawn hours of June 17, 1972, a security guard called police officers to ...
read more
Economic Causes of the American Revolution What brought about the American Revolution? Like most military conflicts, the Revolution was spurred ...
read more
Equality and the Seneca Falls Convention "We hold these truths to be self-evident: that all men and women are created ...
read more
France and the American Revolution In March of 2003, after France opposed a UN invasion of Iraq, two US Republicans ...
read more
General Harriet Tubman and the Underground Railroad Araminta Ross, later named Harriet Tubman, was born into slavery circa 1820. She ...
read more
George Washington's Federal Government When a modern US president travels, he or she expects the electorate to cover the cost. ...
read more
Gold Fever and the Growth of California One January day in 1848, a man named James Marshall was inspecting a ...
read more
Jackie Robinson and the Integration of US Baseball In 1945, when Jackie Robinson batted .387 for the Negro League Kansas ...
read more
Japanese Internment Camps in the United States Just off of US Highway 395, at the foot of the Sierra Nevada ...
read more
John O'Sullivan and America's Manifest Destiny When leaders wish to conquer foreign lands, they invariably put forth a list of ...
read more
John Scopes and the Teaching of Evolution In the mid-1920s, many young Americans flaunted long-established Victorian culture. Women were voting, ...
read more
Lowell Factory Girls of the 19th Century During the first half of the 1800s, girls and young women from throughout ...
read more
Navajo Windtalkers: America's Secret Weapon When the United States fought World War II, they ran the constant risk of information ...
read more
Prayer, Persecution, and Portsmouth: A Story of Colonist Anne Hutchinson Anne Hutchinson (1591-1643) is a key figure in the history ...
read more
Prohibition and its Repeal When clocks struck midnight on January 16, 1920, the United States officially went dry. The age ...
read more
The Botched Bay of Pigs Invasion In the wee morning hours of April 17, 1961, nearly fifteen hundred Cuban exiles ...
read more
The Frenzy of Salem Witch Trials Over the summer of 1692, members of the Massachusetts Bay Colony became caught up ...
read more
The Midnight Ride of Paul Revere "Listen children and you shall hear/The midnight ride of Paul Revere." So begins a ...
read more
The Rise and Fall of Jamestown In the early 1600s, an English preacher named Alexander Whitaker described a land where ...
read more
The Scandalous Typhoid Mary In 1907, Mary Mallon was working as a household cook when an inspector named George Soper ...
read more
The US Presidency and Tecumseh's Curse In 1840, General William Henry Harrison easily won the US presidency. He was celebrated ...
read more
What Caused the Great Depression? The Great Depression was a global phenomenon that significantly changed the course of history. In ...
read more
Who Was Samuel Adams? Today, the name Sam Adams is associated with the Boston Beer Company. How did a statesman's ...
read more
|
|
|
Disclaimer:
The Publisher has strived to be as accurate and complete as possible in
the creation of this website, notwithstanding the fact that he does not
warrant or represent at any time that the contents within are accurate
due to the rapidly changing nature of the Internet.
This site
is a common sense guide to What Caused the Great Depression?. In practical advice websites,
like anything else in life, there are no guarantees of income made.
Readers are cautioned to reply on their own judgment about their
individual circumstances to act accordingly.
This site
is not intended for use as a source of legal, business, accounting or
financial advice. All readers are advised to seek services of competent
professionals in legal, business, accounting, and finance field.
Any
perceived slights of specific people or organizations are unintentional.
|