AMERICA DURING THE GREAT DEPRESSION by ALEX KILBACK


Edited by Tony and Nicole


THE 5 MAIN CAUSES OF THE GREAT DEPRESSION - 1. The Stock Market Crash of 1929 2. Economic Nationalism and Tariffs 3. International Debt from WWI
4. Overproduction 5. Drought Conditions

CONSEQUENCES OF THE GREAT DEPRESSION - 1. unemployment 2. bank failures 3. political upheavals 4. more tariff increases 5. change in role of the government

The Great Depression was an international problem, however, it might have been most devastating in the United States, for it followed a period of rapid growth and rising expectations. Following the Great Depression, people began to doubt the likeliness of achieving the 'American Dream'. The Great Depression marked a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes and lost opportunities for economic growth and personal advancement.

1. The Stock Market Crash of 1929
When the Stock Market crashed, it is important to note that it did not directly cause the Depression, it was just an indicator that something was seriously wrong with the system. The problems that led to this point were excessive speculation and buying on margin. Before the stock market crashed, there had been a lot of investment which meant that less money had been available for foreign loans. This meant that other countries could not borrow as much money in the United States. Many Americans lost everything they'd ever worked for in there life as a cause of the Great Depression.
stockmarket crash.jpg
People on the streets after the Wall Street Crash in 1929

2. Economic Nationalism and Tariffs
This problem began in the United States. The USA decided to put up heavy tariff barriers like The Fordney-McCumber Act and the Smoot-Hawley Bill to increase their isolationism and protectionism. Because of these barriers, other countries put up similar ones, and this restricted trade even further then it already was.

3. International Debt from WWI
The USA did not join World War I from the beginning, so they spent considerably less money and resources then the other countries who were in it from the start. As the USA was becoming an industrial powerhouse, they had a lot of supplies and money that could be used by the warring countries. For these resources, however, they would be able to charge an otherwise unbelievable amount, because the fighting countries desperately needed them. This goes the same for the interest that they could ask on the money they lent, which meant that countries would be in debt to the US for a while after the war. All of this, plus the reparation payments heaped upon the Germans, meant that a lot of countries were pretty broke at this time period. An American man named John Maynard Keynes was the first person to suggest 'spending' out of the Depression, which would involve public works projects and give more people jobs.

4. Overproduction
During the 'Roaring Twenties' people had started to really embrace consumerism. There just seemed to be so many awesome things to purchase! A term called Supply and Demand started to show itself. When the Supply is high, Demand is low. When Demand is high, Supply is low. This second part is what happened at this point in time. The factories were pumping out so many products that they just ended up sitting in warehouses because people already had all that they needed. This caused factories to close, which increased unemployment numbers, and companies could just sell from inventory. Because people were no longer working, they could now not afford to buy any more products and Demand dropped even lower. Businesses were not stopping making products, but they were businesses were laying off workers. If a person is unemployed then he or she can not buy the products that are being mass produced. If the products were not getting bought then the businesses were laying off employee's. A chain reaction.


5. Drought Conditions
The cycles of drought that went in and out through the depression were the worst in history. It started with extremely dry years in 1930 and 1931, and by 1934 there was record reaching dryness. By 1935, 80% of the United States was affected. The drought made the Depression worse, especially in the Great Plains. The "Great" Depression was not only a national but an international disaster. In 1933, the average person living in North Dakota earned only $145 a year. That compared with a national average of $375, over twice as much.
When there was no rain, it meant no crops and when there was no crops it meant lack of food. As well when there was no crops it was usually due to a dust storm, which would cancel school. The whole cycle created massive problems throughout the US.

Sources:

Student Workbook
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929