Elijah Kennealy Sally Wilson English 3 3/2/23 United States Financial Mistakes The Financial conditions of the United States during the 1920s was so unhealthy that it led to the Great depression. There were many different causes for the Great Depression. Some of them are; the gold standard, the bank failures and the low wages of the American people during the 1920s. However, likely the greatest problem out of these was the Gold standard. According to History.com, “A slowing economy combined with the stock market crash of 1929 and a subsequent wave of bank failures in 1930 and 1931 led to crippling levels of deflation. Soon, the frightened public began hoarding gold.”(Konkel) This in turn led to The United States not being able to increase their …show more content…
The reason the banks failed was because they ignored the signs that were presenting themselves and stretched the depository caches to thin. The warnings at the time had come subtly at first. Then with a letter from the federal government to lessen their lending. Yet, with all the money being made, it seemed that they did not need to “ take their collective feet off the gas pedals” (McGee) as History.com put it. They lent unsparingly, and ignored the federal government. When the stock market crashed, it sent many Americans into a frenzy. As the panicking and confused public went to collect their deposits from the banks, they found the banks had also over stretched themselves. With their funds already low from lending, the banks started getting withdrawals for savings they no longer had. The banks thus also panicked and tried to fix the problem too late. The banks stopped lending. Which according to History.com, “made the problem worse.” (McGee). The banks stopped lending when they needed it most. Without lending, they couldn’t collect interest. This stopped the income and the ability to pay the people withdrawing and working at the banks. This led to the collapsing of the banks. With no way to withdraw their savings, many people hoarded gold. Except, the stock market wasn’t the only starting problem; the beginning of the downward spiral of 1929 began …show more content…
It started with the farmers. According to History.com “For farmers in particular, the Great Depression basically began after World War I.” (Little). As they had accumulated debt, and were among the first to show signs of a depression. Then, as the factories and companies started bringing in more money, the workers showed the next sign as the entities didn’t want to raise workers' pay. The workers were left to try to keep up with the economy. Many used stock investments to gain extra income. Though this short lived venture was paid for with loans from banks. This caused people to be unable to withdraw after the stock market crash. This problem caused a domino effect. As the Great Depression began it was only a bigger problem built up from a series of problems. The 1920s was supposed to be a time of prosperity and wealth. However, according to History.com, “for most Americans, it wasn’t.” (Little). The lives of the American people were taking a plunge before even the 1920s started. This was the beginning of the domino effect. Where the problems of the people led to the bank failures, and then to the problem with the gold standard. All these problems are