The Great Depression – American History II Essay (200 Level Course)
The Great Depression was the worst economic downturn is American history. The stock market crashes of Black Tuesday and Black Thursday in October of 1929 were the immediate causes on the Great Depression. I found that there are three underlying causes to the Great Depression. There was the over production by businesses during the 1920s, second the concentration of America’s wealth in the hands of a few people, and third the lack of prosperity among the farmers and the factory workers caused up rest.
Looking at the retailer’s shelves could show the over production by business. The retailer’s shelves were stocked full and no one was buying the merchandise. So the merchandisers put the extra stock in warehouses that were stocked full, so they were not ordering from the manufactures.
In turn, the manufacturers had to cut production and started cutting jobs. This led to the consumer being unemployed, which meant that the consumer could not afford to buy the merchandise.
The wealth of the nation was held in a few people’s hands. The wealthy started putting their money into the stock market in stead of the market. The underconsumption hitting the nation caused “the rich to get richer and the poor to get poorer.” The rich also took on a lot of debt to expand their businesses. When taking on the debt, they used ENRON techniques of misrepresenting their assets. This practice left them very vulnerable to the possibility of having to pay back these loans.
The farmers and the blue-collar workers did not prosper during the Roaring 20s. The farmers were pressed to compete with other growers in other countries. American farmers found themselves further in debt from trying to increase productivity because they started investing in new technology such as plows, harvesters and tractors. The price of cotton, hogs, and cattle fell by half, therefore, the gap between farmers and the urban workers grew. Farmers could never catch up, many became tenet farmers because they could not pay their mortgages, and many just quit farming.
On top of all these issues Herbert Hoover did not know how to deal with the depression. He took the Republican stand that the depression would heal its self. Hoover put into the effect of lassiez faire. Hoover appeared to be heartless and uncaring about the people of the country because of his refusal to help the people. He did try to create the POUR, or President’s Organization on Unemployment Relief to generate private contributions for relief to the poor. However, it never got off the ground. He did get some public jobs started such as the Hoover Dam and Grand Coulee Dam. He also started the Reconstruction Finance Corporation that would have two billion dollars to work with. However, this plan failed also. Then to make things worse he signed the Hawley-Smoot Tariff. It raised taxes by 1/3 and of course hurt the economy more. Hoover was a believer in a balanced budget, however, he would raise taxes with one breath then in the next tell the people to spend more money. Hoover defeated all of the social reform bills brought to him by congress. Even though Hoover is not looked on favorably by history maybe he did lead the way for the New Deal, and government involvement in almost every aspect of out lives.
Hoover stuck to his own morals and beliefs, which lead to the landslide victory of Franklin D. Roosevelt in 1932. Hoovers actions, and the over production by businesses during the 1920s, the concentration of America’s wealth in the hands of a few people, and the lack of prosperity among the farmers and the factory workers were the underlying reasons for the crash of the stock market and the Great Depression.