Causes of the Great Depression Essay

The growing corporations in America dominated most of the economy, creating a large gap between the rich and the poor. During this time period food, lightening, and fuel prices declined significantly, and the cost of living

In the United States, high standard of living is not equally shared with in the Americans. The 1970s and 1990s was period where economic inequality began to grow. Emmanuel Saez, an economics professor at UC Berkeley has been doing a research for the U.S. income inequality. He states that there has been an increase since the 1970s, and has reached levels that have not been seen since 1928. “In 1928, the top 1% of families received 23.9% of all pretax income, while the bottom 90% received 50.7%. But the Depression and World War II dramatically reshaped the nation’s income distribution, by 1944 the top 1%’s share was down to 11.3%, while the bottom 90% were receiving 67.5%, levels that would remain more or less constant for the next three decades. But starting in the mid- to late 1970s, the uppermost percent income share began rising dramatically, while that of the bottom 90% started to fall.”(DeSilver) Ever since then, economic inequality continues to increase, especially in the last three decades.

There are some main causes The great depression, first in 1934 per week They made $ 4.80 per week and They paid $ 3 by The incomes of Their Homes, all that happened to Birmingham Alabama in 1934, in Chicago everything rises for The men and The women for the food , And then spent $ 1.10 that was spent on food in stores, The three cases are The three cases were The financial downfall, low wages, and unemployment.

This time saw much prosperity for certain areas, such as the stock market. Investors were receiving astonishingly high returns on stocks and were seeing their incomes skyrocket. Overall, during the 1980s real GDP per capita increased by 23% and the value of the stock market almost tripled. However the economic choices Reagan made—transferring the weight of taxes from the rich to the poor—had unfairly redistributed the wealth in the nation. Along with the great prosperity came the equal suffering on the part of the lower class who felt the pains of Reagan’s policies. The wealthiest ⅕ of Americans’ income soared by a rate of 14%, while the poorest ⅕ of Americans’ income declined by 24%, widening the gap between the social classes.

The United States began as a hardworking agricultural country. It seemingly led up to what felt like the best years of America, the 1920’s. Widely known as the roaring 20’s were when the industrial and stock market boomed. However too much of a good thing can only end badly, and the 20’s were no exception. On October 29, 1929, better known as “Black Tuesday”, the stock market crashed and America was flipped upside down.

The Great Depression was a dreadful worldwide economic depression that occurred in the 1930s and it was the most profound and longest depression in the American History, which lasted from 1929-1939. Although the Great Depression began soon after the crash of the stock market in October 1929, it is too straightforward to say that that was the major cause of the Great Depression. This crash did not by itself cause the Great Depression. Even before the year 1929, signs of economic trouble had become evident. (Give Me Liberty! An American History, 5TH Edition, Eric Foner, Pg 811).

The Great Depression is one of the most misunderstood events in not only American history but also Great Britain, France, Germany, and many other industrialized nations. It also has had important consequences and was an extremely devastating event in America. It was the longest and most severe depression ever experienced by the industrialized Western world. When the New York Stock Exchange crashed in October 1929, the United States dropped sharply into a major depression. The world was in wide demand for agricultural goods during World War I, but they had rapidly decreased after the war and rural America experienced a severe depression throughout most of the 1920's and even on into the 1930's.

It is said that the cause of the catastrophic stock market crash known as the great depression was due mostly to uncontrolled political and industrial systems otherwise known as capitalism. However, the timeline leading up to the Great Depression proves that many other factors played a role in the stock market crash that occurred in the decade of the 1930's. So lets take a look at rather four, factors contributing to the great depression that we will further discuss in the following paragraphs. Four of the main causes that led up to the great depression were unequal distribution of wealth, uncontrolled political and industrial systems, high tariffs and war debts.

<br>The nations unequal distribution of wealth also contributed to the severity of the depression. During the 1920s the share of the national income

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.

Many people think that the Great Depression was caused solely by the stock market crash. Anybody who tells you this probably didn’t pass U.S. History in high school. The fact is, the Great Depression was caused many different factors. Four of which were overproduction, uneven distribution of wealth, protective tariffs, and the four “sick industries” of the 1920’s.

The United States has faced quite a few depressions every 20 or so years. At the end of the 1920’s the United States had a thriving economy until the Great Depression hit in 1929. The Great Depression was the most severe and longest ever experienced by the industrialized western world. This depression occurred between 1929 and 1939 resulting from a time of major economic decline, bank failures, reduction in purchasing, and the drought conditions. Before the depression, profits for businesses skyrocketed, wages increased, and the distribution of wealth widened. Owning over a third of all American assets, The richest 1% of Americans saved money that could have been redistributed towards the economy and into the middle and lower classes. The middle

After the stock market crash and the banks began to close the public started to lose faith in the nation’s economy. These events are partly responsible for the Great Depression. The public began to withdraw their money from banks causing even more damage. In an effort to improve the situation President Roosevelt and congress passed the Emergency Banking Relief Act and the Federal Deposit Insurance Corporation Act. “Confidence was further enhanced by the creation of the Federal Deposit Insurance Corporation (FDIC), under the Banking Act of 1933, passed in June, which guaranteed that government insured all bank deposits up to $5,000”(Barnes & Bowles, 2014). These acts restored the public’s confidence back into banks and encouraged the public

which caused uneven prosperity. Although the economy was booming in the 1920's most purchasing was done by credit.

The Great Depression was the worst economic disaster in the world around 1929 which created massive unemployment, poverty and World War II. There were several reasons behind “The Great Depression” in 1929 but the cornerstone cause was the stock market crash. However, the groundwork stretches to World War I where there were massive agricultural expansions to feed soldiers leaving farmers in huge debt at the end of World War. Also, American shopper’s less consumption of consumer products due to recession but high investment in stocks fueled by the non-durable credit and installment buying resulted in the inevitable stock market crash. Thousands of banks, business, factories were bankrupt, trade declined and GDP was reduced to half which send economic shockwaves all around the world known as “The Great Depression”. It lasted for a decade and created lasting political, social and economical consequences all over the world. Introduction of “New Deal” by President Franklin D Roosevelt (FDR) was the turning point and best mitigating measures to tackle “The Great Depression” after series of unsuccessful attempts by his predecessor Herbert Hoover.