The Depression Of Americ The Causes Of The Great Depression

The Twenties was a time when people did not care about anything besides having fun. The average person had a job, the economy was flourishing, foreign trade was on the rise and the stock market was booming ("The Crash … and Beyond."). President Hoover said, during his inaugural address, "I have no fears for the future of our country. It is bright with hope" but by the end of 1929 he would regret those inspiring words (Hoover). During a time when people were living the American Dream, few were prepared for or expected the stock market crash and the American nightmare that continued through the 1930s.

The 1920s was a major turning point in American history. Known as “the roaring twenties”, the citizens of the United States enjoyed the new found wealth from the economic turnaround. The United States’ wealth more than doubled as the nation turned into a consumer society. Not all Americans were fond of the changes in society, and not all of the changes were good.

This eventually affected big companies, which led in decrease in production and fired many employees. The unemployment rose higher than twenty five percent, which meant less money to hover up this economic situation.

The 1920s was known for its prosperous and flamboyant lifestyle. The GDP during that time had risen by 30 percent and unemployment was as at an all-time low of 3 percent. This was not meant to last forever. In fact, it was nearly impossible for this to last any longer than it did due to an imbalance that society was unaware of including that not every citizen was experiencing this uncommon wealth. There were still 3 percent unemployed and even some of the employed members of society did not make enough to support a family and were considered homeless. It was in October of 1929 when this so-called luxurious lifestyle vanished as the stock market crashed at a time when the stock market seemed it would never stop increasing. This caused an economic, downhill, rolling ball effect. Those who took out loans to invest in stocks could not afford to repay the banks causing the banks to fail and close down. When the banks closed down, the depositors of that bank lost their life savings causing them to go broke and some company owners to close their doors. This led to a loss of jobs by the employers of those companies. This time period was known as the Great Depression and rightfully so. It is the most significant setback in the American Economy to date. The Herbert Hoover administration was in effect at this time giving the society an easy target to blame. Come time for the next election in 1932, Americans were ready for a change in authority to bring them out of this seemingly black

Prices skyrocketed, quadrupling in the span of four years, but workers saw no increase in pay. This meant that no one could actually afford to feed themselves. (The Great Patriotic War)

The 1920s is notorious for being a good time, with its reputation of being full of fun parties and extravagant living. Those wealthy enough were able to enjoy that along with all the other changes in American culture. In the 1920s the use of installment buying, credit, and stock market investments became a typical part of life. Technology that improved home life, like vacuums and radio, were desired, and these shifts in culture added to the stigma that good times would continue forever. The American people were not aware that common habits in the 1920s would lead to the Great Depression in the 1930s, during which unemployment reached over 25%, the economy struggled, and the fun times ended. The Great Depression was caused by experts that encouraged

The 1920s was often referred to as the "Jazz age", or the "Roaring Twenties". Not only was American culture 'roaring' in terms of social trends and style, but the economy was 'roaring' as well. This related to the economic booming period of rapid expansion and changed social attitudes. The 1920s impacted American Society and economy because of Laissez-Faire, farm crisis, and consumer credit/installment plan. Society was discovering new found freedoms and becoming less regimented. This lead to new technologies disasters and a booming economy. However, hidden behind the optimistic views on the economy, there were significant structural problems, which led to the Great Depression of the 1930s and the notorious stock market crash of 1929.

The economy also changed drastically during the Roaring 20’s. The Boom Cycle was the first reason the economy changed in the early 1920s. WWI had just recently ended in 1918, so this meant that American companies could once again begin building materials to sell, and not just to benefit the war. Soldiers were also coming back home from overseas, and these thousands of men would need jobs. As shown in Document 1, this resulted in a Boom Cycle. The Boom Cycle consists of increased employment leading to increased profits, this resulted in increased purchasing power. Increased purchasing power lead to an increased demand for goods, meaning companies increased production, which resulted in increased sales, and finally completing the cycle, as increased sales led to increased employment. Because of this boom cycle, the American economy was extremely prosperous in the early 1920s. There was one downside to this increased economy, however. The 1920s generation grew up in this prosperous economy, and the older generation saw them as being spoiled. This idea of the 1920s generation being “spoiled” coincides with the flapper movement, as women began wearing more expensive clothing and jewelry. As seen in Document 9, the older generation felt like the 1920s generation didn’t appreciate hard work, or anything that they had in life, and they believed that the new generation wanted more than they needed or deserved. This sense of greed and materialism led people to want to make even more money, so when they heard of the great success people were having in the stock market, thousands of people began to also put money into the stock market. Document 2A states that the average American could make $20,000 to $30,000 overnight by simply investing in the stock market. However, like most good things, this economic prosperity came to a crashing fall. In 1929, the American economy

America was facing the worst recession since the Depression. Nine million people were unemployed, many sick and elderly people became homeless and 17,000 businesses had to

With the economy falling in shambles and companies defaulting on loans, nearly all private and corporate investment ceased. Companies couldn’t afford to expand, and in fact, many had to consolidate in order to cover the margins on their loans. This meant postponing hiring and laying workers off, which caused unemployment to skyrocket. With people now willing to work for less money, wages lessened too. At the same time prices rose in an attempt by companies to make some amount of profit off the goods.

When the citizens had bought all that they could buy, there was a decrease in demand. Suddenly, the industries had an excess of goods and no one to sell it to. At this point, the Fordney-McCumber Act began to cripple the economy of America. Other nations introduced high tariffs to boost their revenue and to spite the United States. Sadly for the United States, these high tariffs and low demand were instrumental in the depression that America experienced. When the stock market crashed on October 29th, 1929 or “Black Tuesday”, the united states, along with other nations were in economic turmoil and the widespread prosperity of the 1920s ended abruptly. The depression threatened people's jobs, savings, and even their homes and farms. During the heart of the depression, over one-quarter of the American population was out of work. For many Americans, these were extremely hard times. When Roosevelt was voted into office, he introduced the New Deal. While this plan tried to help the united states out of it’s isolationist rut, the second world war was the final solution. Mobilizing the economy for world war finally cured the depression. Millions of men and women joined the armed forces, and even larger numbers went to work in well-paying defence jobs.

After 1927, consumer spending declined and housing construction slowed. Inventories piled up, and in1928 and 1929 manufacturers began to cut back on production and lay off workers. Reduced income and buying power in turn reinforced the downturn. By the summer of 1929 the economy was clearly in a recession. Although the stock market crash and its immediate consequences contributed to the Great Depression, longstanding weakness in the American economy accounted for its length and severity. Agriculture, in particular, had never recovered from the recession of 1920-1921. Farmers faced high fixed costs for equipment and mortgages incurred during the high inflationary war years. At the same time prices fell because of overproduction, forcing farmers to default on mortgage payments and risk foreclosure. Because farmers accounted for about one-forth of the nations gainfully employed workers in 1929, their difficulties weakened the general economic structure. Other industries also had experienced economic setbacks during the prosperous 1920s. The older industries such as textiles, mining, lumbering, and shipping faltered, newer and more successful consumer- based industries, such as chemicals, appliances, and food processing, proved not yet strong enough to lead the way to recovery.

The roaring twenties was a time filled with hope and change. President Warren G. Harding promised a “return to normalcy”, which reflected his own conservative values and the voters’ wants for stability and order. Americans felt that they had been through more than enough, and desired prosperity. During the years 1919 and 1920 the Eighteenth and Nineteenth Amendments were passed; the outlaw of alcoholic beverages and the right for women to vote, which ones of the many reasons society was turning their backs on Progressivism. Republicans were beginning to return to their previous dominance. The 1920’s was an economic boom for America, including everything from an increase in jobs, a rise in plentiful goods, new consumer products, and the reduction of taxes. The country was filled with jazz music, dance, and what appeared to be a brighter future. The 1929 crash of stock market was the beginning of a downward spiral leading in to the Great Depression. The stock market crash is often to be confused as the cause of the Great Depression, although that is false. A few of the issues that lead to the Great Depression included; farming (which decreased in demand as farms increased through the states during World War I), banking, and mass unemployment. Capitalism took shape as what was once the individualistic Protestant work ethic was reshaped into industrial work on a grand scale. Each worker contributed to the greater good, and the workers were presided over by a boss

     The introduction of credit to the American public proved to choke the economy rather than to stimulate it. To make an economy run properly, the total demand must equal total supply. The economy of the 1920s produced an over supply of goods. It was not that the surplus products were not wanted, but that the people who needed them could not afford the products. The working class spent most of their money on things they needed: food, shelter, and clothes. They also purchased some luxury items, but their income limited them to only a few of these purchases. Meanwhile, the rich were enjoying their increased profits. While the vast majority did not have enough money to satisfy all of their material wants and needs, the manufactures continued to produce surplus goods. Recognizing that the surpluses could be sold if consumers were financially able to buy them, the concept of buying on credit was established. Credit was immediately popular. Nearing the end of the decade, 75 percent of all automobiles were purchased on credit (EV 526). The credit system created artificial demand for products which people could not usually buy. People could not spend their regular wages to purchase products, because much of their income went toward their credit payments.

Eighty-eight years ago, the New York Stock exchange faced the most horrific financial panic the country as ever seen. The booming twenties had seen great deal of prosperity in the United States economy. Stock prices rose to incredible rates and everyone in the market was one step closer in becoming wealthier. The economic boom had been driven by the automotive industry, and the radio industry. These industries were aiding to complete a new type of market that no one had ever seen in history. With the market continuously increasing and with no predictable end, many individuals were entering the market because they saw the market had opportunities to get rich quickly. The raised prices of stocks and the large increases in trading created the unpredictable market that would eventually crash. On Monday, October 28, 1929, New York had been the primary focus of the entire world. During that week in