This eventually added to the causes of the Great Depression.
Consumers’ demands for goods were dropping in the tight economy, together with employers unable to borrow money from banks to pay their workers lead to businesses laying off more and more workers to cut costs. The vastly unemployed working class of the country could not afford to buy goods that would have fueled businesses, so inventories continue to build up and prices dropped even further, killing more
Thus leading into the Great Depression, otherwise known as the
The 1920's brought about a time of vast consumerism. The victory of WW1 brought about a large upsurge in the economy. As the United States was victorious, all other countries involved in WW1 owed us large sums of economic sustenance. This resulted in many Americans having a raise in the social and economic classes, as they could now afford objects that were previously economically unavailable to them. This large upsurge in the American economy also resulted in the vast decrease of the nation's unemployment rate.
The stock market crash of October 29, 1929 provided a dramatic end to an era of unprecedented, and unprecedentedly lopsided, prosperity. This disaster had been brewing for years. Different historians and economists offer different explanations for the crisis–some blame the increasingly uneven distribution of wealth and purchasing power in the 1920s, while others blame the decade’s agricultural slump or the international instability caused by World War I. In any case, the nation was woefully unprepared for the crash. For the most part, banks were unregulated and uninsured.
This contributed to a struggling economy that established a cycle of debt. Furthermore,
The overproduction of farm products, due to improved technology, and false prosperity caused deflation, which was a reason for the Great Depression. Deflation is when the overall price
The federal government throughout the the 1920’s went through many changes which lead to The Great Depression in the 30’s. One of the foremost causes of the tragic turn of events was, the crash of the stock market. Between the start to end of the 1920’s the stock prices rose five times. This then meant that they had over-inflated prices, and people losing money in the industry. The stock market was a fairly new source that held a position in many homes of Americans.
This meant that many farmers were still in debt from purchasing the machinery but also that many people were laid off as the demand for fresh produce lowered and machines replaced people’s jobs. This created a decrease in the production of food and a rise in unemployment for hundreds of thousands of farmers in the early 1920’s. Industry which was soaring in the 1920’s and saw many a citizen buying lots of things, especially consumer products. Importantly, however, many of these were bought on credit. Production continued to gallop ahead, and the market inevitably began to dry up as people quickly had one of everything, and there were too few people earning enough money to buy all the products.
Many conditions in the United States throughout the 1920s led to a worldwide state of economic depression. This Great Depression had many factors that contributed to its occurrence, including the stock market crash, an economic lull after World War I, a reduction in public spending habits and tense foreign relations after high tariffs were imposed. After World War I, the production of goods rapidly declined, leading to a decrease in income for many businesses, especially farmers. This resulted in more loans being taken out, which eventually led to the stock market crash of 1929. The stock market crash was the final catalyst for the onset of the Great Depression; after people began selling their stocks because economic growth was slowing, stock
he United States benefited from the situation after ww1. American industry had escaped destruction, the nation had a head start on converting its economy from one focused on war to one focused on consumer production. Throughout the 1920s American businesses prospered because of a frenzy of spending on the new consumers goods. Recovering from the war economically proved to be a more difficult task han winning the war militarily.
When the economy doesn’t do so good it seems like the prices on everything goes up. For example the biggest, most recent economy crash happened during 2008-09 the economy went down and the prices for food, and gas all went up. People were even losing their houses. But the economy crash that a lot of people remember the most one is the great depression that happened during the 1930s. It all was the result of the stock market crashing that made a lot of people to lose their money that they had in stocks when it crashed everyone that had money invested in stocks lost it all.
Although the economy was booming, because of the introduction of purchases on credit, it also led to a lot of debt “The debt jumped by 150% from 1930 to 1939, when it was at around $40.44 billion (about $673 billion in today's money.)” according to theatlantic.com and advertising along with the rise of consumerism led people to buy more stuff which led to more debt “Millions of Americans used credit to buy all sorts of things, like radios, refrigerators, washing machines, and cars. The banks even used credit to buy stocks in the stock market. This meant that everyone used credit, and no one had enough money to pay back all their loans, not even the banks.”
Overproduction in America became a big problem due to technological and industrial advancements which left producers with too much supply, and not enough demand from consumers. Due to advancements in technology, production was at an all one high in America. Farmers were able to use new techniques, but began producing product too fast for it to be purchased. This overproduction left producers with too much product and a need to offload, so prices were driven down. As prices were driven down to the lowest point to create sales, this caused problems for the economy.
This also caused people to lose money and investments which in turn, was hurting the economy. Some of the economic factors that led to
