Causes of the Great Depression:
There were 5 main causes of the Great Depression.
1. The main cause of the Great Depression was the Stock Market Crash in 1929. In the 1920’s, people found a new easy way to make money. Stocks. People would put a lot of their money into the stocks. The stocks rose a lot in the 20’s, and more and more people joined. Everyone was living their dream. The stocks were at their all time high. Then in 1929, the stocks fell, and people quickly sold their stocks so they wouldn’t lose money. On October 24, the stocks fell dramatically, leaving people in a panic. Then on October 29, also known as Black Tuesday, “the bottom fell out of the market.” This resulted in unemployment, which led to poverty. Many businesses shut down, and banks were having lots of trouble.
2. Banks Failing was another cause. After the stock market crash, 9,000 banks failed, leaving people with no money.
3. People buying fewer items led to a trickle-down situation. Citizens stopped buying certain items, which led to less production, which led to businesses making less money, which led to people losing their jobs. Unemployment was up to 25%.
4. The United States created a tax act called the Smoot-Hawley Tariff, which made taxes on goods to Europe higher, so European countries didn't buy goods from us.
5. The last cause was the drought condition that happened in the Mississippi Valley. Everyone knows it as the Dust Bowl. Farmers couldn't grow crops, which meant they didn’t have money to pay for their taxes, making them sell their land just to get some money.
Causes of the Stock Market Crash:
Many people blamed the stock market crash on President Herbert Hoover, and they said he didn’t do much to help the crash.
Another reason was because so many people were buying stocks that were becoming overpriced. The people who were buying stocks were putting so much money into the stocks that they began to borrow money from brokers, and the brokers got their money from the banks. This was called buying on margin. The people didn’t expect a stock market crash to happen, but it did, and most people lost everything.
After the people began to make lots of money, they didn’t buy as many goods, which led to less production, less money made for businesses, which ended in people getting laid off.
Hoover Takes Action:
President Hoover thought that a more laid-back or less government would help the Depression. Other people in the government thought that giving people money would help things out, but Hoover thought that doing that would make people become “addicted” to it and not work for their earnings. He also didn’t want to have welfare programs.
He was for the Federal Farm Board, which was designed to raise the prices of crop by helping people by crops so it would stay off of the market until prices rose once again.
He also made the National Credit Corporation, which was an organization that would lend money to the smaller banks so they wouldn’t go into bankruptcy. These actions didn’t help though, and the people were beginning to get a little angry.
Another law he signed was the Federal Home Loan Bank Act, and that lowered mortgage rates for homeowners and farmers could avoid foreclosure by refinancing their farm loans.
The biggest law he passed was the Reconstruction Finance Corporation. That allowed $2 billion for emergency money that would go to banks if they were about bankrupt. He thought that this would be a “trickle-down theory”, which means big businesses would get help, and then that would help the smaller businesses, which would help people out.
Many citizens didn’t think that Hoover tried to do much to help the Depression, but he did. He actually did more than previous presidents did, but he is still known as one of our countries worst presidents.
My Opinion:
I’m so thankful that I wasn’t born during that time period, or that I was even alive during that time period. I don’t know how the people did it. I think that the people shouldn’t have put so much of their money into the stock market and should have just worked for money like most people did.
Sources:
http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm
https://storage.ning.com/topology/rest/1.0/file/get/3310267301?profile=original
http://www.angelfire.com/co/pscst/stock.html
https://storage.ning.com/topology/rest/1.0/file/get/3310265328?profile=original
Comments
Good job Julie!!