preview

Cause Of The Great Depression

Good Essays
The Great Depression was a period of severe economic recession that flogged the American people. It was primarily caused by the overproduction of goods and the massive unequal distribution of wealth. America during the years leading up to the depression had an abundance of production coming off the recent World War, but since wages hadn’t increased, no one was able to buy the products. Also, by 1927, nearly forty percent of all the nations wealth was controlled by the top five percent, and this caused an extremely unstable economy. Similarly, the failure of the Hawley-Smoot Tariff and the closing of banks were both minor causes of the Great Depression. Instead of assisting the farmers, the Hawley-Smoot Tariff, signed by Herbert Hoover, actually…show more content…
Rather than helping the farmers which it was designed to do, it turned out to be the one of the nation 's highest protective tariff(TEXT PAGE 740) This served as a low blow to all international countries America was involved with. Not only did the tariff economically isolate America from the world, but it also created a financial chaos among America 's trading partners. It literally sent America and other nations into a deeper depression(DOCUMENT D). In addition to this, during the nineteen twenties, stock prices were rapidly increasing and because of this, “buying on margin” became very popular. This “buy now, pay later” form of credit worked well with a rising market, but not with a declining one(DOCUMENT B). During this period, the actual market was severely inflated, and not many understood this. They simply kept investing more and more money, and the market finally popped in October of 1929(DOCUMENT C). Those that did have money in the banks, suffered from an unfortunate circumstance. With the collapse of the stock market, everyone ran to banks to withdraw their savings. Quickly, however, this run on banks ended as banks ran out of money. Also, because so many Americans had uninsured deposits, they lost everything. They were the victims of bank failure. They had placed their life savings into banks and they were robbed(DOCUMENT…show more content…
The most immediate effect of the Great Depression was an increase in unemployment. With the market crash and the closing of banks, jobs became very difficult to maintain. By 1929, approximately nine percent of the labor force was unemployed. In just four years, unemployed rose to nearly twenty-five percent(DOCUMENT F). Men, who worked full-time were for the most part fired. Women on the other hand, who were only allowed to work part-time, kept their jobs. This circumstance where women were providing for families created feelings of shame and useless for men, as it upset gender roles. Not only did unemployment leave a physical impact in regard to a lack of money and a lack of food, but it also left a massive psychological impact in relation to men and their joblessness(Lecture). Similarly, the Great Depression led towards a cultural shift among Americans. People had worked so hard and put their life savings in the bank, and all within a day, it was gone. People went from a life of stability, to one of severe uncertainty and this can clearly be seen through the values of Americans during this period. Many became paranoid of the government and resorted to hoarding money in their house and in their pastures. Some even canned and preserved food for decades in advance. Those who lived during this period in America adopted a lifestyle of frugality and signs of these can undoubtedly be seen in grandparents and great grandparents. On a more political standpoint, Herbert Hoover’s
Get Access