Analyze The Causes Of The Great Depression

After World War I on October 29, 1929 the stock market crashes causing much suffering to the economy and citizens known as The Great Depression. By this happening the country's banking system collapsed. People began withdrawing money from their banks but before that could happen banks began to shut down, 641 banks failed, the following year 1930 1,350 banks, by 1932 people began to believe there were no longer any banks to go to. As the people suffered those who went bankrupt where sent to the street hungry and homeless. The Great Depression was a time of great sorrow. There were many causes to The Great Depression but the main ones would be uneven distribution, over production of crops, credit hides problems, banks collapse and stock speculation. With these reasons The Great Depression was one of Americas darkest times.
To begin with, during WWI because the army need much food farmers had to increase production with doing so they had to purchase more land and more tools. But because they only have such limited amount of money they took out loans to purchase land and tractors/tools. After the war during the "Roaring 20's" crop demands decreased enormously. Because of this dramatic downfall
on farmers had difficultly paying off the loan they had received plus their mortgage payment they had to live on credit for a few months and when that ended they where out on the streets. Because farmers made up 1/4 of all American workforce this was the beginning of Americas struggles.
When it comes to distributing money to the Americas workforce It was uneven by a landslide. During the 1920's every worker would have had an increase in pay but the difference is astonishing. The average worker would have had only an 8% increase, while those being paid hourly had a 32% increase in pay, not to mention the corporate workers had a 65% increase. Because of this difference the wealthiest 1% population earned the same amount as the bottom 42%. 60% of American families earn 2,000 or less in a year, but a wealthy family could earn up to 100,000. With this said the problem behind it all is because the lower class has more people they would need many good and needs but because of uneven distribution they can not afford it. The wealthier families could afford such goods but at some point because there are not many Americans with so much money they would not need so many products.
During the 1920's there was a new solution to buying goods called buying on credit, this is where you could pay 10% up front then you would be able to pay monthly. Many Americans took advantage of this they would buy cars, appliances, radios, and other goods on credit, some even bought stock. Many would buy multiple items on credit which would lead to debt at the end of the year. With so many items to pay off, they would stop buying goods till they could pay it all off with cash. When those who have stopped buying such goods the business cycle stops. With less people buying companies goods they would earn less money to pay their workers with some even would be fired. Those who were fired would not be able buy goods they may not be able to pay bills, ending in the streets. Adding more to The Great Depression.
The banking systems where not efficient, most people would go to banks to put money in as a savings account. But banks would allow you to come in and receive a loan. These loans could come from anyone, the bankers would take money from account in use and give it as a loan. The one who receives the loan would be able to spend on whatever they would like. They would just have to pay it back. The problem in this situation would be that if the person who took the loan could not pay it back, then the account the banker took it from would loose money and would have not known. Those who are at fault would be the bank and the one who took the loan. The one who took the loan would indeed have to pay it off even by selling all of their things. But the fact that banks made loans easy to receive again people took advantage of it.
After the war ended many Americans began to have interest in investing in stock. The 1920's were known as the "Roaring 20's" because of its good economy, this was because stock prices where high. Many took loans and bought some expecting much more than what they paid for. Stock speculation was where Investors gambled with money they did not have but they thought they have, they would guess if the stock prices would go up or down. By doing so they took a risk of earning lots of money or it would backfire and they would loose money. One day came when the stock market fell that was at the end of October. many investors became flustered, with there share they had already began selling their stock. On October 24,1929 that day was known as "Black Thursday" With the stock falling even more investors got worried and panicked many rushed to pull their money out. The following week October 29, Black Tuesday was the day the stock market crashed. More that 16 million share were sold because of this event, billions of dollars lost. Those who bought stock on margin lost everything they had they had to sell their things just to survive. There were even some who had lost their homes and were out on the streets.
Those who lost their jobs used all their savings they had, pawned jewelry, sold their furniture, and moved to cheaper lodgings. They did anything they could possibly do to keep their pantries stocked and a home to live in with their family left out on the streets hungry, cold and homeless they had been sleeping on benches abandoned train carts and homes built out of lumber scraps, tar paper, tin, and glass that they found. When there where many in one area it was known as a Hooverville, the people that where homeless blamed everything on President Herbert Hoover for not doing his job correctly. They blamed him for not doing his job, they thought that if he did his job they would not be in the situation they were currently in. They despised him so much they had Hoover blankets which were newspaper that kept them warm at night. They even had a Hoover flag which was just walking around with your pockets inside out. Even when they went out to look for jobs they had their pockets out to show that it was President Hoovers fault. Their houses where constructed where it would be just enough for their family.
When the stock market crashed many families were effected by it. Most employees lost their jobs which increased unemployment, by 1933 25% of the workforce population was unemployed. The lucky men who got to keep their jobs nut had a 10-30% less then their previous pay. How the time changed from the "Roaring 20's" to the Great Depression was very different for everyone. that had to change from living a luxurious life to a poor barely surviving one. During the prosperity time people took loans to buy stock which was good t first but when the stock market crashed those who loaned money lost everything they had. because they were now in debt they were forced to see everything they had from jewelry to furniture. They soon spent the last of their savings and were kicked out of their homes to lives in hand built homes.
When people where left out on the streets they made Hoovervilles. Houses where made of lumber scraps, tar paper, tin, glass, cardboard, or anything that they could use. Most people found living in these homes were the poorest of the poor. Hoovervilles where usually in abandoned cities. Most families tried to be positive to boost their morals and and help each other out. They would go out looking for jobs with their pockets inside out as their Hooverville flag. The largest Hooverville was in the middle of Central park in New York. To stay warm at night they had to use newspapers they found. These people where even considered criminals by those who had more money. Hoovervilles where common all over America, in 1932 millions of people where living in these Hoovervilles. The people who lived in Hoovervilles had a hard time, food was even worse the had to beg to those who had a house and money. These people had such a difficult life during The Great Depression, but they never gave up hope.
In conclusion The Great Depression being one of Americas darkest times had effected everyone, from the poor to the rich to the farmers.
This happened because the stock market crashed causing many problems for those who bought stock. Everyone was happy in the 1920’s because of the good economy, but whatever goes up must come down. People never suspected such a downfall to come right after the Roaring 20’s, they were not ready to face such a difficult life. Some had lost everything, to even sell their jewelry and their furniture. While some got evicted and had to live in Hovvervilles or on the streets sleeping on benches and on abandoned train cars. This all happened because farmers over produce, uneven distribution, stock speculation, credit problems, and the banks
collapsing.