Herbert Hoover Was The Cause Of The Great Depression

The Great Depression, one of the most life changing historic events that happened to America. A lot of people by 1929 saw themselves with no job, and President Herbert Hoover did not know what to do. These suffering years made America realized how spending money without actually spending it could actually lead to a bad period in their lives (Shi and Tindall 1105.) The causes for the Great Depression are endless and still to this day impossible to explain, but only three should stand out from that long list. Some people say that the collapse of the stock market caused the Great Depression, but that was a correlation and not actually the cause for it, there was something way before that actually caused it to happen. The American weak banking

Stocks shares and their prices invested in the United States’ companies, factories, etc. rose up. Then again at the beginning in 1927, prices just flew up the charts, and everything seemed perfect. The year 1919, with some 317 million shares of stock, was nothing compared to the year 1929, with more than a billion. The nation’s total capital was drowned into the stock market (Shi and Tindal 1092-1093). The stock market was America’s economy. What made everyone trust in it so much was that they could invest in stocks by buying “on margin.” “…an investor could make a small down payment (the “margin”) on shares of stock and borrow the rest from a stockbroker, who held the stock certificates as security in case the price plummeted.” (Shi and Tindall 1093). Sadly, if there was a negative outcome on the stock price, such as a declining, then the buyer would not be able to pay the margin all and the stock would be sold at a lower price. Although the stock market was an amazing project, the economy saw itself getting slower and poorer. In 1927, the sale of steel production and automobiles were slowly going down. Then in September 1929, the speculations were correct, the stock market fell directly (Shi and Tindall

Europe never recovered its economy since the Great War. Spain, Italy, France and Great Britain could not buy any American products, because their economy was slowly getting better. (Shi and Tindall 1096). Germany was still struggling a lot to make its economy better. Europe could not pay their debt from the war to the United States, but the U.S needed the money they loaned to the Allies; $11 billion had to be repaid, but France and Britain had zero money. Even then, the United States forced them to borrow a big amount from the American banks, and that made them fall into debt even more. When the stock market crash in October 1929 the United States could no longer help Europe with their economic problems. (Shi and Tindall 1096). Also, The Federal Reserve’s new tariff policy did not let America transfer money abroad, because it was so bad. Germany also hit a depression when they were literally living off American money, but since American banks stopped froze Germany’s economy also did. Furthermore, since Europe could not buy products from the United States because of the Smoot-Hawley Tariff that also hurt America’s economy, and that made America hit rock bottom depression (Shi and Tindall