Depression In America In The 1920's

In the 1920’s America experienced a boom both culturally and economically. Life had improved for many Americans, but not all. However, the boom didn’t last forever, as at the end of the Roaring Twenties, America was plunged into depression. This meant that unemployment and poverty was on the rise and in March of 1933, 13,000,000 Americans were unemployed. This disaster was caused by many factors including too much speculation, overproduction and under consumption and the government’s policy.
Firstly, speculation means that people invest in a business and buy shares in a hope that the business will make a profit and therefore make a profit on their shares. In America, in the roaring twenties, people saw speculation as a ‘get rich quick scheme.’
At the beginning of the twenties, everyone was encouraged to speculate even poor people because people believed that it was healthy for the American economy. This meant that banks would lend out money to people wanting to buy shares, in the hope that these people would make a profit on their shares. However, businesses had to pay their shareholders, which meant that profits had to be spent on investors and not investing in the business. Furthermore, too many were speculating which meant that when people were no longer buying goods or If they had bought goods on credit and were unable to pay their credit off, then business were not making a profit