What was the great depression? The Great Depression was a severe worldwide economic depression in the decade. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s. It was the longest, most widespread, and deepest depression of the 20th century. Although the question that arises is that what actually caused the great depression? The answer to this is that it was not just one factor, but instead a combination of domestic and worldwide conditions that led to the Great Depression.
As such, there is no agreed upon list of all its causes. Here instead is a list of the top reasons that historians and economists have cited as causing the Great Depression. The top five reasons are: * The Stock Market Crash of 1929 * The Bank Failures * Reduction in Purchasing Across the Board * The American Economic Policy with Europe * The Drought Conditions The stock market crash: The stock market crash occurred that on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. In fact, it was one of the major causes that led to the Great Depression.
Two months after the original crash in October, stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression. The Bank Failures: Throughout the 1930s over 9,000 most banks failed. Bank deposits were uninsured and therefore as banks failed people simply lost their savings. The banks that did survive were unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans.
This exacerbated the situation leading to less and less expenditures. Reduction in Purchasing across the Board: With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through instalment plans and their items were repossessed. More and more inventory began to accumulate.
The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation. The American Economic Policy with Europe: As businesses began failing, the government created the Smoot-Hawley Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation. The drought conditions: The drought conditions in America were very bad during the depression in America the poverty levels were very high and many people were homeless.
Was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves. The conditions were so bad and such severe damage was caused that people had to open soup kitchens where they would serve soup and bread for at that time the homeless and poor people. There were huge lines outside the soup kitchens and no matter what happened people would keep standing outside the soup kitchen under almost every kind of circumstance until their chance came to eat to survive from starvation.
People began standing or rather lining up outside the soup kitchens from dawn due to their desperation. The depression in Europe Before the great depression occurred the people and the American govt. thought that they could spend more than the earned. Therefore after the depression the outcome was that they learned not to use too much credit instead of actual cash the bank stopped giving such huge loans to people for some time after the depression. They also started being more care full about their money expenditure.
The citizens of America realized that money didn’t grow on trees and started being very careful about the way they spend their money. The aftermath is that the major effect of the great depression on America was expanded govt. Intervention into new areas of social economic affairs and the creation of more social assistance agencies at the national level. The relationship between the national govt and people changed completely. The govt took on a greater role in the everyday social and economic lives of the people. Ever since the depression America has been more careful about the way they spend.