what caused the great depression

The fantastic Depression was a globallyeconomic collapse that occurred from 1929 to around 1940. During this time in the Combined States, many people lost Everything. Entire families pulled up roots and moved to find non-existent jobs; when they could find an opportunity to work, they were in competition with 1000's of others for that same position. Whole families were living in encampments, seeking shelter under anything they could find; cardboard, scraps of wood, even newspaper. Bread lines were stretched to the limit making an attempt to feed record numbers of starving people. Before we can think about if this catastrophe could occur again, let's take a look at what caused it.

Although the stock market place collapses in 1929, once in September and again in October, are cited as the direct cause of the great Depression, they were actually one piece in a bigger puzzle. The Combined States, fresh from a flourishing economic time termed the Roaring Twenties, fell endureer to a series of events that caused the collapse which lasted until World War II kick started the economy again.

The drought of 1930 was an unpreventable and devastating cause of the fantastic Depression. Farmers, unable to produce vegetation, were unable to pay taxes and keep workers employed. Farmers abandoned their land and moved to the city in search of employment. Those who moved from the city to the country observed hard labor under hostile environments; those who moved from the country to the city found no opportunities and were pressured to travel from town to town in search of employment.

The stock market crash certainly played a large role in the collapse of the economy at this time. People who had invested heavily in the stock industry on credit during the previous decade were unable to repay their bank lending products. Investors began to sell stocks due to decreasing confidence in the marketplace. In turn, financial institutionsgrew to become less willing to give out loans, the lifeblood of the banking industry; conversely, people had no self-assurance in the banking system and did not utilize for lending options. banking institutions were uninsured so that when a bank failed, all money was permanently lost. People withdrew their money and hoarded it in the face of the collapsing banking system, causing more turmoil.

Businesses began to undergo as people with diminishing savings and no prospects lost consumer self-confidence. This led to diminishing profits, more layoffs and higher unemployment. In 1930, in an try to protect American companies, America introduced the Hawley-Smoot Tariff. This was a higher tax on imported Items, and led to reduced trade with foreign nations. Added to this was the financial strain left by World War I as nations were unable to pay back monies they had borrowed from the united States during the war.

Today's economic uncertainty gives cause to speculation; could the united States fall victim to another catastrophe as was seen in the 1930's? While this is not likely, the lessons learned following this collapse should be closely examined to ensure the economy does not endure a secondgood Depression.