Overproduction And Under Consumption During 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.

The Roaring Twenties is known as an age of parties, jazz, and overspending. After World War I, the optimistic American people reacted by celebrating and overspending. They purchased new appliances such as cars, radios and refrigerators; they purchased luxury items like clothes and invested in stocks. Their new attitude towards the booming American economy was carefree, leading to a series of events. First the stock market crashed. Next, the banks failed. Then, companies laid off employees who were unable to make the payments on the items they purchased. Tariffs and droughts further complicated the situation. This decade became known as the Great Depression, because the economic setbacks impacted everyone and everything. But the question is “Why did Americans lose so much money in such a short period of time?” One answer is, the failing stock market. A second is unregulated banking systems which allowed for buying on margin. Third, the lifestyle following World War I was too materialistic. The Great Depression was caused by Americans failing to responsibly manage their money.

The Great Depression of the 1930’s was caused by many problems. They include overproduction, monetary policy, war debt, tariffs, the stock market crash, and unequal distribution of wealth. These each play a specific and intricate role in bringing the U.S economy to its knees.

The Great Depression was the entire 1920’s in the making. Throughout the twenties, the American people bought goods on credit, but many people were unable to pay back what they had spent. This superficial prosperity was believed to help the economy, but in reality, it weakened the economy by artificially raising the price of stock and causing under consumption in the early 1930’s (Kelly 3). Eventually all of this credit and Speculators caused for the stock market crash, by rigging the economy to fail. High tariffs, like the Hawley-Smoot tariff, caused other nations to be unable to afford trade with America (Kelly 4). The verdict was to buy the expensive American

During the 1920s the American people led themselves to their economic demise. In America, the Great Depression occurred during the 1930s after the crash of the stock market. “The Roaring Twenties”, which occurred before the Great Depression, was a time when the assembly line created more jobs and money to be used. This new economic prosperity, brought about the stock market, in which hundreds of Americans put in their money in hopes of their company making profits. The Great Depression was caused by stockholders using more money then they could pay back, workers using the non-shameful credit to buy products, which led Americans into debt, and the lack of demand, when there was an increase in supplies.

The Great Depression was a devastating time for many Americans. From 1929 to 1932, the US experienced an economic downturn that was calamitous to the lives of many people. Millions upon millions of Americans lost everything when the stock market crashed on October 29, 1929. After exiting an era that left people living a life of luxury, the stock market crash came as a surprise. As a result of the stock market crash, many became unemployed and many families were being forced to close their businesses. Although there were many factors that contributed to the cause of the Great Depression, the three main causes were The Stock Market Crash of 1929, high unemployment, a decrease in consumer purchases due to being “stuffed with stuff” during the roaring twenties.

In the 1920s there was a trend of consumption by the American people, many citizens bought stocks and luxury items on credit rather than cash. This took a terrible turn in 1929 when the stock market crashed on October 29th. This was one of the major events that led to The Great Depression. The Great Depression was also caused by speculation and installment buying, income maldistribution, and overproduction. Each of these topics created serious problems for the economy that ended with debt, unemployment, and poverty.

The United States had just gained victory from World War I and was thriving. The period known as the roaring 20s was a time of success and materialism. Consumers were buying more and more products and spending money on credit. People were frivolously spending money and buying stock in the stock market. Although things may have appeared to be a time of success and prosperity, a storm was brewing and there were underlying weaknesses in the economy.

During the 1920’s business was booming, many Americans were using credit cards to buy materials that they knew they could not pay back, businesses were producing products in an efficient manner, the cycle of debt was inevitable and electricity was being used in every American home. However, years later disaster strikes, on October 29 1929 Americas once healthy economy with a 4% unemployment rate suddenly spiraled out of control due to the stock market crash where billions of dollars were lost since many Americans wanted wealth and would go to any measure to achieve it which lead to careless investments and many investors raced to take their money out of the stock market as soon as it crashed. This unstable economy did

Firstly, poverty brought on by the Great Depression spread throughout the country and made unemployment increase significantly. The output of crops in the Midwest significantly decreased because of the winds and dirt deposits onto the crops of the Dust Bowl. In Text 4, Franklin Delano Roosevelt states, “a host of unemployed citizens face the grim problem of existence…. Our greatest primary task is to put people to work.” The quote represents the fact that unemployment in America was in such a bad spot where the government needed to step in and help the majority of the people who were not financially stable. Another cause why American economy crashed is because employers realized that people would do anything for work and work for just about anything, so their immediate response was to lower worker’s wages so the employers made more money. It says in Text 3, “The volume of manufactured goods dropped sharply, as did the national payroll. The response was to lay off workers, slash dividends, reduce inventories, cut remaining wages, forgo improvements and reduce production.” The quote depicts economic struggles workers dealt with throughout the Great Depression and Dust Bowl. Overall, unemployment gripped the workforce of America, making it the worst economic depression America has ever been in.

The economic expansion of the 1920’s, with its increased production of goods and high profits, culminated in immense consumer speculation that collapsed with disastrous results in 1929 causing America’s Great Depression. There were a number or contributing factors to the depression, with the largest and most important one being a general loss of confidence in the American economy. The reason it escalated was a general misunderstanding of recessions by American policymakers of the time.

When the stock market crashed, it caused “The Great Depression.” The “Jazz Age” was a booming time for American lifestyles. At the time, many citizens had a mentality of living in the “now.” They often felt the need to spend all the money that they were earning. Parties with jazz music were big and everybody went to them. The economic growth and prosperity of the 1920s is what caused the struggles during the great depression.

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.

The Great depression occurred between 1929 and 1939 and was by far the longest lasting and deepest economic trough in the history of the Western world. It began in America right after the big October 1929 stock market crash, and ruined millions of investments, pretty much sending Wall Street into a tailspin. Over the next 10 years, people stopped spending money and investments came to a halt, causing industries to decline in output and unemployment to rise dramatically because failing companies had to lay off workers. The Great depression had reached a peak in the year 1933, and nearly fifteen million Americans were jobless and almost half of the banks located around the country had gone under. Although Franklin D. Roosevelt, the president

America’s Great Depression is believed as having begun in 1929 with the Stock Market crash, and ending in 1941 with America’s entry into World War II. In order to fully comprehend the repercussions and devastating effects of the Crash of 1929, it is important to examine the factors that contributed to the catastrophic event which led to The Great Depression. The Great Depression was the worst economic slump in U.S. history, and it spread to most of the industrialized world. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920s, and the