The Great Depression In The 1920's

The Great Depression was an important event in United States history. It affected all Americans, and has a lasting legacy on our economy today. Prior to the Depression, in the 1920s, the United States had transformed from an economy based on the needs of World War I, to an economy based on what consumers wanted. With this transition, the U.S. began to produce more home appliances and electronics, rather than weapons and supplies. Because people were buying products, the stock market and the economy were able to grow and thrive. Additionally, the concept of Laissez Faire was practiced, which kept the government away from regulating big business. Therefore, businesses grew without any limitation. The United States flourished in the 1920s, but
It was a build up over time that created a much larger problem. After World War I, when consuming and buying was at an all time high, the idea of credit developed. People began to buy products with the idea of “buy now, pay later”. They no longer realized the immediate effects that their purchases had on their bank accounts. The main issue with these credit lines was the lack of repayment. When the bill from the credit purchases would arrive, people would realize that they did not have enough money to pay the debt they had built up. This also led to the problem of banks having no money. When loans weren’t repaid, banks suffered. Due to this, citizens with money in the bank lost it all. This led to the next issue: overproduction. It occured when the supply of a product is higher than the demand for it. Because people no longer had money, there was a sudden drop in the demand for goods. The companies continued to produce the same amount of goods, leading to extra products on a very large scale. The companies lost money, and could no longer employ as many workers or pay them for their work. They had to lay workers off and make them work longer hours for less pay. Companies were no longer making money which also meant their stocks were not making money. Citizen who had bought stocks before were frantically trying to sell their stocks to avoid losing money, but no one wanted to buy the stocks anymore. The stocks were
Many areas of American life had to be reconstructed in order to escape from this. At the beginning of the Depression, President Herbert Hoover was in office. His solution to problems did not involve government interfering with business, or government helping people. In the 1932 presidential election, Hoover was faced by Franklin D. Roosevelt, or FDR. Unlike Hoover, Roosevelt believed that the government should help the people, and that there needed to be more control on big American businesses. When FDR won the election and got into office, he create the New Deal. This was created to assist and regulate all affected forms of Americans lives. It had different plans which focused on three main points: relief of the homeless and broke, recovery of the unemployed, and reform on banks and companies affected. It also had different plans for different groups. The first area or group that the New Deal focused on was the unemployed. Multiple plans were created for the unemployed including the Civilian Conservation Corps. This plan offered jobs to men ages 18-25 in exchange for money, housing, and a small pay. Another plan created for the unemployed was the Civil Works Administration, or the CWA. This gave jobs to people who would tutor the illiterate, build parks, repair schools, and do other jobs involving the community. Finally, to aid elderly, or those unemployed due to injury, the Social Security