The Great Depression In America In The 1920's

In the early 1920s, America was at its peak of prosperity and economy growth. This time period was labeled the “New Era” and “Roaring Twenties” because of the decade’s high-spirited energy and cultural changes. American men and women had this idea that business and its wonderful products were what made America great and they would indulge in spending in new consumer items American factories send forth. Mass production of goods fueled corporate profits and national economic prosperity. Though the America had become the World’s leading economy, it did little to help other nations such as Europe, rebuild their shattered economy. The combination of national and international economic problems and the stock market crash caused the Great Depression.
Europe’s economy shattered after World War 1. The Allied nations were pressured to repay their war loans causing a tangled web of debts and compensation that sapped Europe’s economic vitality. On top of that, the United States enacted high traffics to prevent other nations from selling their goods to Americans. Fewer sales meant foreign nation had less money to buy American goods, which were becoming abundant because of mass production of the items. American banks decided to increase the nations export trade by extending credit to foreign customers, and they fell into fresh debt which then piled onto the existing depts.1 While the international economy was facing problems, the domestic economy wasn’t faring well either. Wealth was badly distributed among Americans. Poor continued to suffer from poverty, while the wealthy became wealthier. The wealthy made up of about 1 percent of the population, but received a staggering 15 percent of the whole nation’s income. By 1929, the inequality of wealth distribution produced a serious problem in product consumption. The rich would spend generously, but only a tiny fraction of the population could afford to buy products. The ordinary folks could only buy food and basic necessities that were affordable. In the mid-decade signs of economic trouble started to appear. Automobile sales declined, new construction slowed down, and companies began cutting production and laying off workers. As investment and loan opportunists faded, about five thousand banks failed, causing thousands of people to lose their life long savings. Even with economic distress, life kept moving on. As the international and national economies faltered, American remained positive and high-spirited. Hoping to gain more wealth, Americans rushed to the stock market in Wall Street. During the 1920s, U.S stock market expanded to its highest peak in August of 1929. By this that time, people could not image that the market might fall, and that they may be forced to pay thier margin loans with cash they did not have. People where so caught up in trying to become rich, they would mortgage their homes to pour their cash in the stock market. Soon, the prices started to decline by September and early October. On October 18, the stock market went into free fall, as the wild rush to buy stocks gave way to equally wild rush to sell those stocks. Panic set in on October 24, which also came to be known as “Black Thursday”, and more then 12.9 million stocks were trade as investors tried to salvage their losses. After that the day, the stock market prices kept declining as United stated plumed into the Great Depression. Billions of dollars were lost and thousands of investors were wiped out. By 1933, almost half of America’s banks failed, and more then 15 million people become unemployed, which was 30 percent of the workforce.

The Great Depression was the deepest and longest economic downturn in the history of the Western industrialized World. It was once thought that the Stock Market Crash of 1929 was the sole cause of the Great Depression, but it was not. It did act to accelerate the global economic collapse. I believe it was the combination of international and national economic crises that caused the Great Depression.