U.S. History Study Notes - The Great Depression

Essay by thekingandqueen April 2009

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What were the causes of the Great Depression?-in the beginning of the 1920's the economy had already started to change-there was a shift towards a new consumer-oriented economy-people began to purchase more and more goods and services-when the stock market fell, there was a sudden collapse of purchasing power caused by mass employment and a loss of savings-stock market crash - crash of confidence (rush to get money out of banks - banks didn't have it, created a catastrophic panic)-the financial system had some problems-banks were virtually free from effective regulation-people were not able to pay their loans-the investment industry was free from regulation and given to misrepresentation, manipulation of stock prices, and corrupt inside deals-poor policies enacted by the administration also had a role in causing the Great Depression-the Republican administrations of the 1920's were focused on reducing the interference of the government in the economy and lowering the taxes on the wealthy-misdistribution of income - small percentage of the population controlling most of the wealth (majority cannot afford products that are there)-overproduction/underconsumption-company did not keep any reports - people who were investing in companies had no idea of the economic health of that company-depressed sectors in the economy - looked like there was a lot of prosperity of US, however certain sectors were not doing well agriculture was suffering economically (no one wanted to grapple with these problems)-"dust bowl" - drought-construction industry and textiles industry suffer-the Great Depression was magnified by the aftermath of World War I-Britain, France, and other allies had borrowed large amounts of money from the United States to fight the war-global economic crisis - money goes from U.S.

to Germany and Germany pays the Allies and then the money goes back to the U.S.

-the U.S. economy falls → U.S. money to Germany...