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Herbert Hoover Was The Cause Of The Great Depression

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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 …show more content…

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 …show more content…

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

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People bought stocks with the speculation of benefit to optimistically help support their families, as well as being able to have all home necessities. The fight for a small profit at the least was strong and intense because of the little amount of money there was to spread between businesses and citizens. Americans began to overextend their budgets and purchased more stocks at higher prices than what they were actually worth. William E. Leuchtenburg stated in The Perils of Prosperity that, “With debt no longer being shameful ..... consumers bought goods on installment at a rate faster than their income was expanding” (Doc 6).

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As the economy increased in the U.S it also took a hit because other countries that had just come out of war looked to the U.S for support. The war in Europe may have been over, but the clean up had just begun. The U.S was the only country who seemed to be able to help. This would create lots of challenges for the U.S. It would be like walking a tightrope blindfolded, one wrong step and the economy would come crashing down. The U.S would be able to pull the feat off, but would still lose many lives in the battles soon to come.

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During the summer of 1929, the American economy entered an ordinary ression following the end of WWI. As a result, consumer spending dropped, and unsold goods began to pile up in factories, slowing down production. In return, people started to be laid off from their jobs. At the same time that this is going on, stock prices are creeping up, and by the fall of 1929, it had reached levels that could not be justified by predicted future earnings.

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The United States called for the debts to be repaid to keep its faltering economy from sinking to far in debt. Reparation payment loans stopped to Germany, causing an even worse debt increase, unemployment in all the countries involved in WWI skyrocketed, over produced products in countries increased and the worth of the dollar decreased causing deflation and poverty to enclose around many countries and worsening the recession. The dilemma caused by the call for debts to be repaid caused the countries to falter, without the money from the United States; these countries couldn't rebuild causing the inability to buy imported goods from the United States causing President Hoover to place tariffs to high for citizens buy products made in the United States. Making this move was bad for world trade which would have helped countries rebuild quicker. In the end, president Hoover made a critical error in placing tariffs on American

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There began to be a gradual decline in prices and the stock market ruptured. On October 24, 1929, the infamous “Black Thursday” took place, where stock holders went on a panic selling spree. Things then went from bad to worse, stock prices went down 33 percent. People stopped purchasing goods and business investments decreased after the crash. In the fall of 1930, the first of four major waves

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