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The Great Depression In The 1920's

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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. In 1929, the immediate panic affected millions of Americans. Our economy had never seen anything like it, and they were unsure of how to handle the situation. With multitudes of people have a decrease in income, this made the economy take a turn for the worse. Consumers were no …show more content…

With the reduction of general prices and the impact of of producers who use the input, the economy was struggling to survive. Millions of consumers out of jobs and unable to purchase goods, prices were deflating, and in major fluctuation will affect every citizen. After the stock market crash, nearly 10,000 banks had failed. When banks were first established, they had no type of insurance. People began to pull all of their money out of banks due to their lack of trust, and feeling uneasy about the lack of insurance on their money. With few banks left, they too decided to shut down. They were worried about their survival, and avoided handing out loans at all costs. With practically all the banks shut down, this caused chaos in the economy.
Another root of the problem was, American government recently made addition of credit to the economy during the 20’s. This went on to Americans living a lifestyle that they couldn’t afford, they would buy items to simply look as though they were higher up on the social ladder. With people beginning to create a lifestyle there weren’t financially able to handle, there was extreme downfall in the

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This being the cause of prices concerning stocks and shares to increase, to the point that it was nearly impossible to invest in the market. This being a factor in causing companies to terminate their employees swiftly, and if an individual remained employed, their wage decreased dramatically below the minimum wage. Many counterparts had invested in the stocks with loans or borrowed money, and when the market crashed, their share had been utterly wiped out, leaving them with absolutely no money. Individuals who had their money in banks, became skeptical of the banks and started to withdraw their money, to preserve their remaining savings. This, causing the banks to have to take out loans from bigger banks so that they could pay the individuals their money.

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When these stocks crashed banks were left without money and many had to close down. People lined outside of banks for hours to try and get their savings money out. This was impossible since banks did not have enough money. Millions of people lost their savings and were unable to get the money they needed to support their families. This also led to a big rise in unemployment.

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Throughout the 1920s, the United States expanded rapidly and the nation’s economy saw a massive increase. The stock market underwent a rapid expansion, reaching its peak in August of 1929. By 1929 overproduction and unemployment had risen which made stock prices higher than usual, this led to the crash of the stock market and the increased progression into the Great Depression. The Great Depression was the worst economic crisis in modern time, starting from the late 1929 to 1939 it was the longest and most severe depression ever experienced by industrialized United States. Because of this, Franklin D. Roosevelt’s administration created the New Deal.

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The companies kept pushing higher prices than what their products were really worth. This lead to the stock market crash. This meant workers were fired, wages cut, and business went out of business. After the stock market crashed, Americans lost trust in their banks to hold their

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This led to the market crash of 1929 which triggered a chain reaction that caused many businesses to fail and led to widespread unemployment. Additionally, the failure of the banking system coupled with the crash and inaction from the Federal Reserve made the Depression worse. There was a wave of bank failures due to many banks being unable to withstand the economic pressure. People run to banks to withdraw their savings out of fear that the bank would fail because, at the time, the Federal Deposit Insurance Corporation did not exist. As banks failed, people lost their savings, and credit became scarce, making it difficult for businesses to get the loans they needed to operate.

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