The Great Depression: Effects and Solutions

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The Great Depression was probably the most devastating economic catastrophe in US history. As the 1920s went on, many grave problems threatened the economy. Despite the fact that some people became rich, many others could barely scrape up an adequate living. Many important businesses struggled. Consumers were stuck with deep debts. As the 1930s approached, it was clear that the economy was faltering.

The superficial wealth of the late 1920s concealed weaknesses that would signal the beginning of the Great Depression. Many events hinted at the depression. Industries such as railroads, textiles, and steel can barely make an income. New types of transportations such as trucks, buses, and private automobiles forced some railroad companies out of business. Mining and lumbering, which thrived during WWII, lost businesses due to the lack of demand. Because new forms of energy were introduced (natural gas, hydroelectricity, and oil), the coal industry saw their profits drop.

One important indication is that new houses were built less and less. That's because when housing starts decline, so do jobs in other industries like furniture manufacturing. Another suggestion at a depression is in the farming area. The high supply of crops dropped its prices. Between 1919 and 1921, the annual income decreased from $10 million to $4 million.

In fact, the prosperity in the 1920s never actually existed. Many Americans were in debt already because of buying goods on credit. By making credit easy, Americans' debt thickened with each item on credit. Because many people had trouble paying off their debt, consumers cut back on spending. Another likely cause of the Great Depression was the uneven distribution of income. Between 1920 and 1929, the salary of the wealthiest 1% rose by 75%, while only a 9% increase as a whole. Over 75% of families earned less than...