Causes Of The Great Depression

Piecing together the events of the Great Depression is like putting together a jigsaw puzzle. This tragic crisis affected all American citizens as well as people around the world and is characterized by many historians as the worst economic disaster in American history. There are many opinions expressed by historians and economists regarding the reason for the disaster. The severe economic decline resulted in bank failures, stock market losses and massive unemployment. Combined, these forces required most people to adjust to a new life of searching for food and shelter as a result of the depression. The plight of families, factory workers, farmers and businessmen reflect one of the darkest periods in history.

The 1987 collapse of stock

Perhaps this disastrous era is speaking to us today with our unstable economy, high unemployment and failing banks. Let’s look at the legislation that was put into place during the Great Depression era and see how it has fared over the years.

The Glass-Steagall Act, also known as the Banking Act of 1933, was passed by Congress to prevent improper banking activities. Commercial banks were involved in stock market investment and took on too much risk with depositor’s money. Banks became greedy and made unsound loans to companies that they had invested in. Many officers and directors of commercial banks also held advisory positions in security companies. A conflict of interest definitely existed and led to unethical and unscrupulous dealings. With the passing of the Glass-Steagall Act, banks would be

Was this really the result of the effects of the repeal of the Glass-Steagall Act of 1999? From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the panic of 2008. The years after the repeal were simply a repeat of the Roaring Twenties. People went wild with spending and the big financial institutions were once again participating in unscrupulous business practices. Banks originated fraudulent loans and again sold them to their customers in the form of securities, something that could not have happened had the regulations of 1999 not been repealed. The hard lessons of the Great Depression had not been well learned. Financial institutions and big business began to fail. Commercial institutions received emergency loans from the Federal Reserve and the investment conglomerates were able to take advantage of these loans also. The American people were disturbed that their tax dollars were used to bail out the greedy and very wealthy, the very people who had created the problem in the beginning. These events took a toll on the American people, again resulting in a loss of confidence in their government. Once again the average citizen had been negatively impacted by the out of control management of large