# data[].attributes.attachment_link.title
Causes of the Great Depression: US History for Kids ***

# data[].attributes.attachment_link.description
Find a summary, definition and facts about the Causes of the Great Depression for kids. United States history and the Causes of the Great Depression. Information about the Causes of the Great Depression for kids, children, homework and schools.

# data[].attributes.attachment_link.title
What was the Great Depression and why did it start in the USA? | South African History Online

# data[].attributes.attachment_link.description
The depression was caused by a number of serious weaknesses in the economy. Although the 1920s appeared on the surface to be a prosperous time, income was unevenly distributed. The wealthy made large profits, but more and more Americans spent more than they earned, and farmers faced low prices and h…

# data[].attributes.attachment_link.title
Great Depression: Causes, Definition & Dates | HISTORY

# data[].attributes.attachment_link.description
The Great Depression was the worst economic downturn in world history. Learn about the Dust Bowl, New Deal, causes of the Great Depression, a Great Depression timeline more.

# data[].attributes.attachment_link.readable_text
The Great Depression was an economical crisis that affected the whole world and left 13 million people unemployed. The entire American banking system almost collapsed with over 5,000 banks going out of business. The causes of the Great Depression are still a subject of great debate among economists today.

Possible Causes

* Property and land prices collapsing after a property boom, causing investors to lose money.

* Too many people speculating on the stock market to try and make money quickly.

* Black Tuesday - the stock market crash that happened on October 29, 1929 is considered to be one of the main causes of the depression. Stockholders lost over 40 billion dollars, which had a devastating effect on the world economy.

* Unbalanced distribution of wealth: wealthy Americans owned more than a third of all the American assets. When the economy started to struggle, these people started to hoard the money that caused industries to struggle even more.

* An overabundance of small banks that didn't have enough funds to pay out all the people's savings at once after the stockmarket crash. In the 1920s, bank deposits were not insured and when a bank would fail, all the people who banked there, lost their savings.

* Reduction in spending. As mentioned before, people stopped spending money after the stock market crash. This meant there were more products that were produced than people were buying, forcing factories to reduce their workforce. With the unemployment rising, spending decreased even more, putting more people out of work, creating an downward spiral.

* America recalling debt from European countries caused the economies of countries that were already struggling financially after the war to collapse.

There are many factors that came to play and that may have contributed to the Great Depression. What is certain is that there was one big domino effect that caused the one economy after the other to struggle, leaving thousands of people without income.

# data[].attributes.attachment_link.title
Causes of the Great Depression - History

# data[].attributes.attachment_link.description
The Great Depression was an economical crisis that affected the whole world and left 13 million people unemployed. The entire American banking system almost collapsed with over 5,000 banks going out of business. The causes of the Great Depression are still a subject of great debate among economists today.

# data[].attributes.body
Look at this wonderful chart thing
:

# data[].attributes.body
https://www.youtube.com/watch?v=GCQfMWAikyU

# data[].attributes.body
https://www.youtube.com/watch?v=GCQfMWAikyU

# data[].attributes.attachment_link.readable_text
Hall of Mirrors: The Great Depression, the Great Recession, and the Uses-and Misuses-of History. By Barry Eichengreen. Oxford University Press; 512 pages; $29.95. Buy from Amazon.com

ECONOMISTS usually work with large samples of data, so they are in a bind when it comes to depressions: there simply haven't been enough to yield predictable patterns. When the world stood on the precipice in 2008, its leaders had only the 1930s as a template.
Get our daily newsletter
Today they congratulate themselves on having avoided another Great Depression. Were they right to? Barry Eichengreen argues no. Their reading of the 1930s, he writes, is incomplete, often erroneous and has led them to settle for weak or no growth and for too-timid reform of their financial systems.

Mr Eichengreen, of the University of California, Berkeley, recreates the last century's two great episodes of financial instability with compelling portraits of bankers and policymakers and accessible theoretical explanations. His retelling of America's and Europe's recent crisis adds little to earlier accounts, but his version of the 1930s is rich with detail and myth-busting insights.

The Great Depression is often blamed on central bankers who stood by and let their banks fail. In fact, for the first year, the Fed filled its lender-of-last-resort job as intended, quickly injecting cash into banks after the stockmarket crashed, and ring- fencing healthy banks with loans when weaker banks failed.

The real failures came later. In 1931 Austria's government had to let its biggest bank collapse because it couldn't meet foreign powers' conditions for a loan. Gold fled Austria, then Germany, then Britain, and finally America. Governments responded with monetary and fiscal austerity. The resulting hardship provoked political revolt. Royal Navy sailors protested over proposed pay cuts and Germans elected communists and Nazis.

Many of these events repeated themselves 80 years later. Ireland went bust guaranteeing its oversized banks' liabilities, much as Austria did in 1931. By letting Lehman Brothers fail in 2008, in order to expunge the moral hazard from earlier bail-outs, American officials reprised the decision to let Guardian Trust fail in 1933.

Today's officials did learn some important lessons from the 1930s. Ben Bernanke, chairman of the Fed and himself a Great Depression scholar, was quick to lend to Europe when its banks were in desperate need of dollars. Most rich countries decided to enact fiscal stimuli in the early years of the crisis.

But in responding so well to the initial instability, "success thus became the mother of failure," Mr Eichengreen charges. On fiscal policy, he is certainly correct. Within a couple years, America, Britain and Europe had all pivoted from stimulus to austerity. Unlike their forebears, they couldn't blame the gold standard. Rather, officials were motivated by misplaced fear of bond- market vigilantes, desire for a smaller state, or, in Europe's case, an insistence that profligate governments tighten their belts in exchange for support.

But Mr Eichengreen at times stretches the facts to fit his narrative. He accuses the Fed of keeping monetary policy too tight because of a preoccupation with inflation; but it enacted several rounds of unconventional stimulus.

Because the last crisis was less severe than the Depression, bankers were able to hold firm in resisting radical reform of the financial system. Yet Mr Eichengreen does not explain what more radical reform would accomplish; if anything, tougher regulation of banks would probably hold back their lending, which would make the recovery even weaker.

Mr Eichengreen wisely acknowledges that history has many, often conflicting, narratives which make it an imperfect guide to the present. This guarantees that when the next crisis hits, the world will find brand new mistakes to make.

# data[].attributes.attachment_link.description
Hall of Mirrors: The Great Depression, the Great Recession, and the Uses-and Misuses-of History. By Barry Eichengreen. Oxford University Press; 512 pages; $29.95. Buy from Amazon.com ECONOMISTS usually work with large samples of data, so they are in a bind when it comes to depressions: there simply haven't been enough to yield predictable patterns.

# data[].attributes.attachment_link.readable_text
The Great Depression lasted from 1929 to 1939 and was the worst economic depression in the history of the United States. Economists and historians point to the stock market crash of October 24, 1929, as the start of the downturn. But the truth is that many things caused the Great Depression, not just one single event.

In the United States, the Great Depression crippled the presidency of Herbert Hoover and led to the election of Franklin D. Roosevelt in 1932. Promising the nation a New Deal, Roosevelt would become the nation's longest-serving president. The economic downturn wasn't just confined to the United States; it affected much of the developed world. One cause of the depression in Europe, was that the Nazis came to power in Germany, sowing the seeds of World War II.

Stock Market Crash of 1929

Remembered today as "Black Tuesday," the stock market crash of October 29, 1929 was neither the sole cause of the Great Depression nor the first crash that month, but it's typically remembered as the most obvious marker of the Depression beginning. The market, which had reached record highs that very summer, had begun to decline in September.

On Thursday, October 24, the market plunged at the opening bell, causing a panic. Though investors managed to halt the slide, just five days later on "Black Tuesday" the market crashed, losing 12% of its value and wiping out $14 billion of investments. By two months later, stockholders had lost more than $40 billion dollars. Even though the stock market regained some of its losses by the end of 1930, the economy was devastated. America truly entered what is called the Great Depression.

Bank Failures

The effects of the stock market crash rippled throughout the economy. Nearly 700 banks failed in waning months of 1929 and more than 3,000 collapsed in 1930. Federal deposit insurance was as-yet unheard of, so when the banks failed, people lost all their money. Some people panicked, causing bank runs as people desperately withdrew their money, which in turned forced more banks to close. By the end of the decade, more than 9,000 banks had failed. Surviving institutions, unsure of the economic situation and concerned for their own survival, became unwilling to lend money. This exacerbated the situation, leading to less and less spending.

Reduction in Purchasing Across the Board

With people's investments worthless, their savings diminished or depleted, and credit tight to nonexistent, spending by consumers and companies alike ground to a standstill. As a result, workers were laid off en masse. In a chain reaction, as people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans; repossessions and evictions were commonplace. More and more unsold inventory began to accumulate. The unemployment rate rose above 25%, which meant even less spending to help alleviate the economic situation.

American Economic Policy With Europe

As the Great Depression tightened its grip on the nation, the government was forced to act. Vowing to protect U.S. industry from overseas competitors, Congress passed the Tariff Act of 1930, better known as the Smoot-Hawley Tariff. The measure imposed near-record tax rates on a wide range of imported goods. A number of American trading partners retaliated by imposing tariffs on U.S.-made goods. As a result, world trade fell by two-thirds between 1929 and 1934. By then, Franklin Roosevelt and a Democrat-controlled Congress passed new legislation allowing the president to negotiate significantly lower tariff rates with other nations.

Drought Conditions

The economic devastation of the Great Depression was made worse by environmental destruction. A years-long drought coupled with farming practices which did not use soil-preservation techniques created a vast region from southeast Colorado to the Texas panhandle that came to be called the Dust Bowl. Massive dust storms choked towns, killing crops and livestock, sickening people and causing untold millions in damage. Thousands fled the region as the economy collapsed, something John Steinbeck chronicled in his masterpiece "The Grapes of Wrath." It would be years, if not decades, before the region's environment recovered.

The Legacy of the Great Depression

There were other causes of the Great Depression, but these five factors are considered by more history and economics scholars as the most significant. They led to major governmental reforms and new federal programs; some, like Social Security, federal support of conservation tillage and sustainable agriculture, and federal deposit insurance, are still with us today. And although the U.S. has experienced significant economic downturns since, nothing has matched the severity or duration of the Great Depression.

Sources and Further Reading

Eichengreen, Barry. "Hall of Mirrors: The Great Depression, the Great Recession, and the Uses-and Misuses of History." Oxford: Oxford University Press, 2015.

Turkel, Studs. "Hard Times: An Oral History of the Great Depression." New York: The New Press, 1986.

Watkins, Tom H. "The Great Depression: America in the 1930s." New York: Little, Brown, 1993.

# data[].attributes.attachment_link.description
The Great Depression lasted from 1929 to 1939 and was the worst economic depression in the history of the United States. Economists and historians point to the stock market crash of October 24, 1929, as the start of the downturn. But the truth is that many things caused the Great Depression, not just one single event.

# data[].attributes.body
https://jobs.lovetoknow.com/Unemployment_During_the_Great_Depression

# data[].attributes.attachment_link.readable_text
The Great Depression lasted from 1929 to 1939 and was the worst economic depression in the history of the United States. Economists and historians point to the stock market crash of October 24, 1929, as the start of the downturn. But the truth is that many things caused the Great Depression, not just one single event.

In the United States, the Great Depression crippled the presidency of Herbert Hoover and led to the election of Franklin D. Roosevelt in 1932. Promising the nation a New Deal, Roosevelt would become the nation's longest-serving president. The economic downturn wasn't just confined to the United States; it affected much of the developed world. One cause of the depression in Europe, was that the Nazis came to power in Germany, sowing the seeds of World War II.

Stock Market Crash of 1929

Remembered today as "Black Tuesday," the stock market crash of October 29, 1929 was neither the sole cause of the Great Depression nor the first crash that month, but it's typically remembered as the most obvious marker of the Depression beginning. The market, which had reached record highs that very summer, had begun to decline in September.

On Thursday, October 24, the market plunged at the opening bell, causing a panic. Though investors managed to halt the slide, just five days later on "Black Tuesday" the market crashed, losing 12% of its value and wiping out $14 billion of investments. By two months later, stockholders had lost more than $40 billion dollars. Even though the stock market regained some of its losses by the end of 1930, the economy was devastated. America truly entered what is called the Great Depression.

Bank Failures

The effects of the stock market crash rippled throughout the economy. Nearly 700 banks failed in waning months of 1929 and more than 3,000 collapsed in 1930. Federal deposit insurance was as-yet unheard of, so when the banks failed, people lost all their money. Some people panicked, causing bank runs as people desperately withdrew their money, which in turned forced more banks to close. By the end of the decade, more than 9,000 banks had failed. Surviving institutions, unsure of the economic situation and concerned for their own survival, became unwilling to lend money. This exacerbated the situation, leading to less and less spending.

Reduction in Purchasing Across the Board

With people's investments worthless, their savings diminished or depleted, and credit tight to nonexistent, spending by consumers and companies alike ground to a standstill. As a result, workers were laid off en masse. In a chain reaction, as people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans; repossessions and evictions were commonplace. More and more unsold inventory began to accumulate. The unemployment rate rose above 25%, which meant even less spending to help alleviate the economic situation.

American Economic Policy With Europe

As the Great Depression tightened its grip on the nation, the government was forced to act. Vowing to protect U.S. industry from overseas competitors, Congress passed the Tariff Act of 1930, better known as the Smoot-Hawley Tariff. The measure imposed near-record tax rates on a wide range of imported goods. A number of American trading partners retaliated by imposing tariffs on U.S.-made goods. As a result, world trade fell by two-thirds between 1929 and 1934. By then, Franklin Roosevelt and a Democrat-controlled Congress passed new legislation allowing the president to negotiate significantly lower tariff rates with other nations.

Drought Conditions

The economic devastation of the Great Depression was made worse by environmental destruction. A years-long drought coupled with farming practices which did not use soil-preservation techniques created a vast region from southeast Colorado to the Texas panhandle that came to be called the Dust Bowl. Massive dust storms choked towns, killing crops and livestock, sickening people and causing untold millions in damage. Thousands fled the region as the economy collapsed, something John Steinbeck chronicled in his masterpiece "The Grapes of Wrath." It would be years, if not decades, before the region's environment recovered.

The Legacy of the Great Depression

There were other causes of the Great Depression, but these five factors are considered by more history and economics scholars as the most significant. They led to major governmental reforms and new federal programs; some, like Social Security, federal support of conservation tillage and sustainable agriculture, and federal deposit insurance, are still with us today. And although the U.S. has experienced significant economic downturns since, nothing has matched the severity or duration of the Great Depression.

Sources and Further Reading

Eichengreen, Barry. "Hall of Mirrors: The Great Depression, the Great Recession, and the Uses-and Misuses of History." Oxford: Oxford University Press, 2015.

Turkel, Studs. "Hard Times: An Oral History of the Great Depression." New York: The New Press, 1986.

Watkins, Tom H. "The Great Depression: America in the 1930s." New York: Little, Brown, 1993.

# data[].attributes.attachment_link.description
The Great Depression lasted from 1929 to 1939 and was the worst economic depression in the history of the United States. Economists and historians point to the stock market crash of October 24, 1929, as the start of the downturn. But the truth is that many things caused the Great Depression, not just one single event.

# data[].attributes.body
A+ Please

# data[].attributes.attachment_link.title
The Causes of the Great Depression | Texas Gateway

# data[].attributes.attachment_link.description
The student understands the causes of the Great Depression.

# data[].attributes.body
I love you

# data[].attributes.attachment_link.title
The Great Depression: Crash Course US History #33

# data[].attributes.attachment_link.title
The Great Depression: Newspaper headlines from the 1929 stock market crash

# data[].attributes.attachment_link.description
When the newspapers first reported on the 1929 stock market crash, nobody knew what was coming. See these Great Depression newspaper headlines for how it began.

# data[].attributes.attachment_link.provider_name
History Crunch - History Resource for 21st Century Teachers and Learners!

# data[].attributes.attachment_link.description
The Great Depression was a significant event in world history and was of particular importance to American history. It was a worldwide economic recession that occurred primarily during the 1930s. ...

# data[].attributes.attachment_link.readable_text
March 4, 1929: That was the day Herbert Hoover was elected President of the United States. It was also just seven short months before the start of the Great Depression. As unexpected as the Great Depression was, President Hoover thought he knew exactly what needed to happen. He was "confident that the economy would recover quickest without tampering with the Federal Government" (Kennedy). He believed in the traditional American values of individualism, free enterprise, and a decentralized government. Hoover was trying to kill two birds with one stone: cut taxes while also doubling spending for public works programs. Yet while Hoover was President, the country went into the deepest bankruptcy ever experienced. Critics said "he simply could not overcome his fiscal conservatism," and that, "federal relief programs would undercut core American values with irretrievable negative consequences" (Kennedy). Speaker of the House, John Nance Garner, attempted to help Hoover by releasing a bill of his own, which caused outrage with President Hoover. Hoover placed tariffs, started corporations, signed bills, and raised the budget significantly but it was not enough to avoid the worst economic downturn in American history.

Right after the stock market crashed on October 29, 1929, Hoover asked Congress for a $160 million tax cut while also doubling spending for the construction of public buildings, dams, highways, and harbors (Kennedy). Initially, he was praised for his efforts because they seemed to be working. While citizens were pleased with the efforts made by their President, unemployment was at its highest record levels. Ironically, Hoover was criticized for his efforts on public work projects which were formed to create jobs, but instead it caused more unemployment.

As the Depression worsened, "Hoover failed to recognize the severity of the situation or leverage the power of the federal government to squarely address it" (History). People accused Hoover of being insensitive toward the suffering of millions of Americans who had nothing. He vetoed many bills that some believe would have brought the country out of its hole. During his presidency, he "vetoed thirty-seven bills, of which twenty-one were regular vetoes and sixteen were pocket vetoes" (Senate).

In 1930, Hoover infamously signed the Smoot-Hawley Tariff which "virtually closed the [US] borders to foreign goods and ignited a vicious international trade war," all while the Great Depression was just beginning (Reed). The Smoot-Hawley Tariff was known as President Hoover's crowning folly during his presidency. One of Hoover's governing philosophies was limitation of the federal government. When the Great Depression worsened, America was desperately calling for the intervention of the federal government, but Hoover refused, claiming it would be "steps towards socialism" (Hoover). Hoover believed that what the American people wanted from the federal government would help in the short-term but not long-term. Hoover's way of running a failing nation irritated Democrats and even some in his own political party. He was under great scrutiny to keep this nation above water, but instead it was just sinking deeper and deeper.

At this point, the Dust Bowl was also occurring, a 10-year drought that caused Hoover to recommend large appropriations for loans to rehabilitate agriculture. A large number of farmers were planting crops, to top, which led soil to become too dry with aridity and erosion, which made great swaths of land unsustainable for crops. Hoover was cutting money from other government agencies in order to fulfill the agriculture loss. During this desperate time, if land would had been more sustainable for crops, farmers would have had more jobs.

Although Hoover's efforts were noted by the general public, many viewed these actions as too little and too late. His plans for saving money failed miserably. When Hoover "took office, the federal budget was $3.1 billion" (The Washington Post). In order to balance the budget, Hoover signed the Revenue Act of 1932 which "increased American taxes greatly" and "further discourage[d] spending" (Romer and Pells). With the hope that the Revenue Act of 1932 would make a difference, the federal government continued to run a budget deficit. Hoover's "last budget, Fiscal 1933, was $4.6 billion" which was drastic increase in just four years (The Washington Post).

Hoover's political rival, Speaker of the House, John Nance Garner, had a different approach to balancing the budget. His plan was to enforce a national sales tax, which was not on President Hoover's agenda. Citizens were getting so fed up with the amount of money the US had lost that they created the "Hoover flag," which was an empty pocket turned inside out, representing citizens lack of money (Phelps).

President Hoover was a Republican while Speaker John Nance Garner was a Democrat, which automatically caused tension between the two. In the beginning of his term as Democratic Speaker of the House, Garner was known for his more "conservative and independent view of major economic questions" (Kennedy). However, as he grew into his position, he became supportive of federal intervention in economic affairs. In his first few months as Speaker, he tried to cooperate with President Hoover's economic programs such as the Reconstruction Finance Corporation and the Glass-Steagall banking bills.
In order to bring confidence back to businesses, Hoover formed the Reconstruction Finance Corporation. It loaned public money directly to businesses that were struggling, with most of the funds allocated to banks, insurance companies, and railroads. The Glass-Steagall banking bill was an act that separated investment and commercial banking activities (Romer and Pells).

By 1932, however, Garner lost his patience with the lack of change that Hoover had made and he was determined to "repudiate Hoover's programs" (Senate). Considering Garner's conservative characteristics as Speaker, Garner became more assertive and offered a federal relief spending bill of his own. "Given his reluctance to offer his own proposals and his long record of opposition to increased government spending," Garner went against Hoover, whom he had respected his whole professional career (Senate). Hoover immediately vetoed the bill calling it "the most gigantic pork barrel raid ever proposed to an American Congress!" (The Washington Post). After Garner's efforts to increase government spending, the relationship between Hoover and Garner would never be the same. People were losing money fast and the United States was falling more and more into bankruptcy.

During this time, many cartoons and editorials were being printed in all newspapers regarding the Great Depression and President Hoover. For example, the author of an editorial regarding Hoover and his presidency, "Mr. Hoover Reproves," in the Dallas Morning News, somewhat favored the efforts of President Hoover and agreed with the lengths to which he had gone for the US ("Mr. Hoover Reproves"). However, the editorial also had a tone of reprimanding the House of Representatives for fiscal irresponsibility: "the House of Representatives [left] undone the things which it ought to have done and in doing things which it ought not to have done" ("Mr. Hoover Reproves") The editorial mentions the Goldsborough Bill, which initially, "Mr. Hoover paid his respects to" ("Mr. Hoover Reproves"). The Bill stated, "that the average purchasing power" as established by the Department of Labor in the wholesale markets, "shall be restored and maintained by the control of the volume of credit and currency" (Time). Once Hoover learned more about the Goldsborough Bill, however, he responded back to Congress and told them if the measures were to reach him again, he would veto it right away. The editorial primed the reader for understanding current events that were happening when the cartoon, "What This Congress Needs" by John Knott, was published (Knott).

Knott's illustration depicts President Hoover standing over and holding onto the collar of an obviously distressed looking man who is John Nance Garner. Garner is portrayed writing on three different government papers with the titles "Reduce Government Expenses," "Balance Budget," and "Cut Appropriations" (Knott). Those were Hoover's three main goals during his presidency. President Hoover is saying, "Do the job right, or else-" with a stern look on his face (Knott). He is depicted as a tall and large man compared to the small, timid Garner sitting at the table. Garner represented the House of Representatives as a whole, which explains why Hoover said, "Do the job right, or else-" because the President had lost trust in the Speaker after he a proposed a bill opposing what Hoover believed (Knott).

President Hoover is seen holding a large bottle of castor oil. During the Great Depression many citizens used castor oil as a home remedy for stomach aches. However, people avoided it at all costs because castor oil's taste was so foul. President Hoover said, "Do the job right, or else," because no one wanted to drink the oil, so he was threatening Garner (Knott). If Garner did not "do the job right", according to Hoover, then he was going to make Garner drink the castor oil medicine.

Hoover's presidency was not what he expected when coming into office. He tried fixing an economically unstable nation by raising the budget, cutting appropriations, placing tariffs, and starting financial aid programs/corporations in the hope of restoring America back to its financial stability and prosperity. Speaker Garner attempted to help the nation on his own, but that was not possible without the support of the President. The cartoon "What This Congress Needs," and the accompanying editorial helped readers interpret the current events during Hoover's presidency (Knott). Little did America know that nearly eighty years later, the US would experience another financial crisis, the 2008 Great Recession.

Works Cited:

History.com Staff. "Herbert Hoover." History.com, A&E Television Networks, 2009, www.history.com/topics/us-presidents/herbert-hoover.

Hoover, Herbert. "The Gilder Lehrman Institute of American History." Herbert Hoover on the Great Depression and New Deal, 19931-1993. Gilder Lehrman Institute of American History, https://www.gilderlehrman.org/content/herbert-hoover-great-depression-and-new-deal-1931%E2%80%931933

Knott, John. What This Congress Needs. 7 May. 1932, Dolph Briscoe Center for American History, Austin. Section 2, page 2.

Kennedy, Susan Estabrook. "Hoover, Herbert." Encyclopedia of the Great Depression, edited by Robert S. McElvaine, vol. 1, Macmillan Reference USA, New York, 2004, pp. 458-465. Gale Virtual Reference Library, link.galegroup.com.ezproxy.lib.utexas.edu/apps/doc/CX3404500265/GVRL?u=txshracd2598&sid=GVRL&xid=6e1f97f5. Accessed 27 Mar. 2018.

"Mr. Hoover Reproves." Dallas Morning News, 7 May. 1932. Editorial. Section 2, page 2.

Phelps, Shirelle, and Jeffrey Lehman, editors. "Hoover, Herbert Clark." West's Encyclopedia of American Law, 2nd ed., vol. 5, Gale, Detroit, 2005, pp. 287-289. Gale Virtual Reference Library, link.galegroup.com.ezproxy.lib.utexas.edu/apps/doc/CX3437702155/GVRL?u=txshracd2598&sid=GVRL&xid=fe1a1eff. Accessed 27 Mar. 2018.

Reed, Lawrence. "The Greatest Spending Administration in All of History." Mackinac, 1 Jan. 1998, www.mackinac.org/4026.

Romer, Christina D., and Richard H. Pells. "Great Depression." Encyclopædia Britannica, Encyclopædia Britannica, Inc., 2 Feb. 2018, www.britannica.com/event/Great-Depression/Sources-of-recovery#ref802198.

Senate. "John Nance Garner, 32nd Vice President (1933-1942). U.S. Senate: John Nance Garner, 32nd Vice President (1933-1941), 12 Jan. 2017, https://www.senate.gov/artandhistory/history/common/generic/VP_John_Garner.htm

Senate. "Vetoes." U.S. Senate: Vetoes, United States Senate, 5 Apr. 2018, www.senate.gov/reference/Legislation/Vetoes/vetoCounts.htm.

Time. "National Affairs: Goldsborough Bill." Time, Time Inc., 16 May 1932, content.time.com/time/magazine/article/0,9171,846980,00.html.

The Washington Post. "Hoover's 'Austerity' Program." Washington Post, the, Jan. 0003. EBSCO host, ezproxy.lib.utexas.edy/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=nfh&AN=wapo.c424e6e0-8108-11e2-a671-0307392de8de&site=ehost-live

# data[].attributes.attachment_link.description
March 4, 1929: That was the day Herbert Hoover was elected President of the United States. It was also just seven short months before the start of the Great Depression. As unexpected as the Great Depression was, President Hoover thought he knew exactly what needed to happen.

# data[].attributes.body
https://www.youtube.com/watch?v=wAZ-RpAO1z4

# data[].attributes.body
https://www.thoughtco.com/causes-of-the-great-depression-104686

# data[].attributes.attachment_link.title
The Great Depression - Causes - Check123, Video Encyclopedia

# data[].attributes.attachment_link.description
Watch this video and learn all about The Great Depression - Causes. Amazing facts about 20th Century, american history, The Great Depression, and economic history in 1, 2 or 3 minute videos!

# data[].attributes.attachment_link.readable_text
Whether or not our current, slow economic recovery will last depends on who you talk to. But either way, you'd hope that we can learn from the last few years-and from the crises of our past too.

From recession-ready living for frugal sustainability to great stimulus ideas from the Great Depression, Lloyd has been digging in to the parallels between our current financial and ecological crisis and the challenges of the Great Depression for some time. But he's not the only one.

Janaia Donaldson of Peak Moment TV-the folks who have brought us videos of a sailboat Community Supported Agriculture program and neighbors removing fences and starting gardens -sat down with her own mother, Rowena Donaldson, to talk about her experiences of the Great Depression.

From making do with less through the value of hard work to finding the joy in the simple things in life, there are plenty of important lessons to learn from this beautiful video. For all our talk of the Plenitude Economy, it's worth remembering that many of the ideas we are exploring have been around for a very, very long time.

A pioneer of peak oil community action sits down to talk with her mother about a previous crisis and how she survived it.

Please enable JavaScript to view the comments.

# data[].attributes.attachment_link.title
Sustainability Lessons from the Great Depression

# data[].attributes.attachment_link.description
A pioneer of peak oil community action sits down to talk with her mother about a previous crisis and how she survived it.

# data[].attributes.attachment_link.readable_text
The Great Depression was a worldwide economic depression that lasted 10 years. It began in the United States on October 24, 1929, otherwise known as "Black Thursday," when panicked investors sold a record 13 million shares. Over the next four trading days, the Dow Jones Industrial Average, a popular proxy for the U.S. stock market, fell nearly 25%. It continued to decline for the next three years, losing nearly 90% between October 1929 and July 1932.

The stock market crash significantly reduced consumer spending and business investment. Consequently, U.S. GDP decreased dramatically in the first years of the Great Depression, dropping from $104.6 billion in 1929 to $57.2 billion in 1933. In comparison, GDP declined just 2% at the height of the Great Recession between 2008 and 2009.

Key Takeaways

Unemployment Reached 25%

The Great Depression affected all aspects of society. By its height in 1933, unemployment had risen from about 3% to nearly 25% of the nation's workforce. Some workers that kept their jobs saw their wages fall, many others had to work lower paying jobs that they were often overqualified for. From 1929 to 1932 the U.S. gross domestic product was nearly cut in half, dramatically decreasing from $104.6 billion to $57.2 billion, partly due to deflation. The Consumer Price Index fell 27% between November 1929 to March 1933, according to the Bureau of Labor Statistics.

Panicked government leaders passed the Smoot-Hawley tariff in 1930 to protect domestic industries and jobs, but it actually worsened the issue. World trade plummeted 66% as measured in U.S. dollars between 1929 and 1934.

The Depression's pain was felt worldwide, leading to World War II. Germans were already burdened with financial reparations from World War I. That caused hyperinflation. This added to the pressures that ultimately led the German people to elect Adolf Hitler's Nazi party to a majority in 1933.

Life During the Depression

The Depression caused many farmers to lose their farms. At the same time, years of over-cultivation and drought created the "Dust Bowl" in the Midwest, destroying agricultural production in a previously fertile region. Thousands of these farmers and other unemployed workers migrated to California in search of work.

Note

What Caused It

According to Ben Bernanke, a former chairman of the Federal Reserve, the central bank helped create the Depression. It used tight monetary policies when it should have done the opposite. According to Bernanke in 2004, these were the Fed's five critical mistakes:

1. The Fed began raising the fed funds rate in the spring of 1928. It kept increasing it through a recession that started in August 1929.

2. When the stock market crashed, investors turned to the currency markets. At that time, the gold standard supported the value of the dollars held by the U.S. government. Speculators began trading in their dollars for gold in September 1931. That created a run on the dollar.

3. The Fed raised interest rates again to preserve the dollar's value. That further restricted the availability of money for businesses. More bankruptcies followed.

4. The Fed did not increase the supply of money to combat deflation.

5. Investors withdrew all their deposits from banks. The failure of the banks created more panic. The Fed ignored the banks' plight. This situation destroyed any of consumers' remaining confidence in financial institutions. Most people withdrew their cash and put it under their mattresses. That further decreased the money supply.

The Fed did not put enough money in circulation to get the economy going again. Instead, the Fed allowed the total supply of U.S. dollars to fall by a third. Later research has supported parts of Bernanke's assessment.

What Ended the Great Depression

In 1932, the country elected Franklin D. Roosevelt as president. He promised to create federal government programs to end the Great Depression. Within 100 days, he signed the New Deal into law, creating 42 new agencies throughout its lifetime. They were designed to create jobs, allow unionization, and provide unemployment insurance. Many of these programs still exist. They aim to help safeguard the economy and prevent another depression.

Note

Many argue that World War II, not the New Deal, ended the Depression. Still, others contend that if FDR had spent as much on the New Deal as he did during the War, it would have ended the Depression. In the nine years between the launch of the New Deal and the attack on Pearl Harbor, FDR increased the debt by $3 billion. In 1942, defense spending added $23 billion to the debt. In 1943, it added another $64 billion.

Reasons a Great Depression Could Not Happen Again

While anything is possible, it's unlikely to happen again. Central banks around the world, including the Federal Reserve, have learned from the past. There are better safeguards in place to protect against catastrophe, and developments in monetary policy help manage the economy. The Great Recession, for instance, had a significantly smaller impact.

Some argue that the sizes of the U.S. national debt and the current account deficit could trigger an economic crisis. Experts also predict that climate change could cause profound losses.

Frequently Asked Questions (FAQs)

When did the Great Depression end?

How many people died during the Great Depression?

How did the Great Depression change the role of government in America?

# data[].attributes.attachment_link.title
What Happened During the Great Depression?

# data[].attributes.attachment_link.description
The Great Depression of 1929 was a 10-year global economic crisis. Here are causes, impact, and chances of recurrence.

# data[].attributes.body
https://www.historyonthenet.com/causes-of-the-great-depression/

# data[].attributes.body
enjoy!

# data[].attributes.body
https://www.thoughtco.com/causes-of-the-great-depression-104686

# data[].attributes.attachment_link.readable_text
The price of oil is down nearly 40% in five months, a swift fall in one of the most important and visible commodities in the world. After seeing such a crash in price, investors and pundits are quick to trot out the specific reasons for the decline.

I've heard many people this week give the singular reason that oil has fallen so hard so fast. While it makes for a better narrative after the fact, markets rarely move because of a single variable or data point. That would be far too easy. Usually it's a confluence of events that gets magnified by leveraged investors and a herd mentality as everyone heads for the exits at once.

Even after the fact it's difficult to know exactly why the markets behave the way they do. Complex adaptive systems don't follow a set script.

The biggest case in point of all-time is the Great Depression and the stock market crash of 1929-1932. Consider the stat sheet from this colossal downturn:

The unemplyment rate hit nearly 25%

GDP contracted almost 27% (for comparison purposes, it was down only 4.3% in the most recent crisis)

The stock market fell in excess of 85%

This period has been studied by scholars, economists and historians for decades, yet we still can't find a good answer to the question: Did the stock market crash cause the Great Depression or did the Great Depression cause the stock market crash?

Here's a list of the most heavily cited reasons:

There was a huge increase in consumer debt in the 1920s as technological innovation advanced at a rapid pace. For the first time ever, people could buy radios, fridges, cars or clothes on credit. It's estimated that by the end of the 1920s over one-eighth of all retail sales were made on credit.

Margin debt in the stock market was out of control. Speculators had basically taken over the market with an excessive use of leverage. Almost 20% of the total market of listed stocks was purchased on margin loans by 1929.

The Federal Reserve's overly restrictive monetary policies (Ben Bernanke studied these policies and wasn't going to repeat their mistakes during the Great Recession).

Declining commodity prices from overproduction due to World War I, which led to tariffs and currency devaluations across the globe.

The rigidities of the gold standard.

President Hoover's policy mistakes.

You could make a legitimate case for each of these reasons and many more that I'm sure I missed. But the reason every boom and bust cycle gets so out of control comes down to an abdundance or lack of confidence. Legendary author F. Scott Fitzgerald had this to say about the crash in 1931:
The most expensive orgy in history is over because the utter confidence which was its essential prop received an enormous jolt, and it didn't take long for the flimsy structure to settle earthward. It was borrowed time anyhow - the whole upper tenth of the nation living with the insouciance of grand ducs During the late 1920s, American economic reality had become dependent on a precarious vision of the future. After the Crash, when every tenet of the new era philosophy was shown to be false, Americans lost that confidence in the future which is necessary for the successful operation of the economic system. As George Orwell observed, "poverty annihilates the future." When asset values declined, causing havoc in the banking system, a psychology of fear replaced the optimism of the previous decade. Perhaps, as some claimed, the Roaring Twenties were morally degenerate years deserving of a biblical visitation: but they were also a period when people exhibited a capacity for dreaming, a faith in the future, an entrepreneurial appetite for risk, and a belief in individual freedom. These profoundly American traits took a severe knocking in October 1929 and appeared to be extinguished during the Great Depression. They would return. and the casualness of call girls.
Edward Chancellor wrote one of the definitive accounts of history's biggest manias and panics called Devil Take the Hindmost. These are his concluding thoughts on the Roaring 20s and the comeuppance that followed:

The huge gains and losses that can occur in the markets are rarely as severe as they were in the 1920s and its aftermath in the Great Depression. Whatever reasons people try to assign to a big move in either direction for the economy or the markets, the collective confidence of the participants is always involved.

Source:
Devil Take the Hindmost

# data[].attributes.attachment_link.description
The price of oil is down nearly 40% in five months, a swift fall in one of the most important and visible commodities in the world. After seeing such a crash in price, investors and pundits are quick to trot out the specific reasons for the decline.

# data[].attributes.attachment_link.readable_text
Cartoonist Wallace Mathis was born in 1904 in Collierville, Tennessee. During his college years, he drew cartoons for Vanderbilt University's humor magazine and yearbook. Although he pursued a career as a teacher at Louisville's Rugby University School, his interest in drawing persisted. In 1933, he began publishing daily cartoons in Louisville's Courier-Journal newspaper. The decade following the Stock Market Crash of 1929 was a time of economic stagnation and social turmoil. Mathis's cartoons were created during this period and capture the spirit of Americans during the Great Depression. His single-panel cartoons depicted a character named "Rollin' Stone," described as a "philosophical tramp who commented on small-town happenings." Rollin' Stone was a down-to-earth character who was down on his luck, not unlike many Americans of the time. Rollin' Stone was a regular feature in the Courier-Journal until 1941. The Filson has over 1,000 of the original pen and ink cartoons.

# data[].attributes.attachment_link.title
Humor of the Great Depression Era | The Filson Historical Society

# data[].attributes.attachment_link.description
Cartoonist Wallace Mathis was born in 1904 in Collierville, Tennessee. During his college years, he drew cartoons for Vanderbilt University's humor magazine and yearbook. Although he pursued a career as a teacher at Louisville's Rugby University School, his interest in drawing persisted. In 1933, he began publishing daily cartoons in Louisville's Courier-Journal newspaper.

# data[].attributes.body
http://www.cland.k12.ky.us/userfiles/13/classes/441/5causesofthegreatdepression.pdf?id=8459

# data[].attributes.attachment_link.readable_text
Few areas of historical research have provoked such intensive study as the causes of America's Great Depression-and for good reason. Tens of millions of humans suffered intense misery and despair.

How bad was the Great Depression? The dimensions of the economic catastrophe in America and the rest of the world cannot be captured fully by quantitative data alone, but here are some figures that might help put this economic nightmare into perspective:

From 1929-1933, production at the nation's factories, mines, and utilities fell by more than half.

People's real disposable incomes dropped 28%.

Stock prices collapsed to one-tenth of their pre-crash height.

The number of unemployed Americans rose from 1.6 million in 1929 to 12.8 million in 1933.

At the height of the Depression, one of every four workers was out of a job.

Because of these unspeakable traumas, the Great Depression and its causes have remained at the forefront of economic study and debate. The Great Depression was a complex event, and understanding what happened is no small challenge. In this guide, we aim to give you a clear picture of the key historical figures, policies, and events that caused and extended America's Great Depression.

We'll start by breaking down the timeline of how exactly the Depression unfolded, which we'll break up into into four distinct phases.

The Four Phases of the Great Depression

When you think of the Great Depression, probably the first thing that comes to mind is the massive stock market crash of 1929, when stock prices plummeted spectacularly and investors dumped their stocks as fast as they could. The ensuing panic was memorable indeed, but it was only one aspect of the Depression. In fact, the Depression had four distinct phases:

1. The government's "easy money" policies caused an artificial economic boom and a subsequent crash.

2. President Herbert Hoover's interventionist policies after the crash suppressed the self-adjusting aspect of the market, thus preventing recovery and prolonging the recession.

3. After Hoover left office, Franklin Delano Roosevelt's "New Deal" expanded Hoover's interventionism into nearly every aspect of the American economy, thus deepening the Depression and extending it ever longer.

4. Labor laws such as the Wagner Act struck the final blow to the remaining healthy sectors of the economy, dragging the last remaining bulwarks of productivity to their knees.

Each of these phases are marked by distinct events, and each had their own specific causes. Together they produced one common result: business stagnation and unemployment on a scale never before seen in the United States. Let's examine each phase and its causes in turn.

1. Easy Money: A Series of False Signals

The first phase of the Great Depression was a massive boom during the "Roaring 20's," which inevitably burst in 1929. In order to understand this crash, we first have to understand the boom and how it happened.

For various reasons, the government in the 1920's created monetary policies that ballooned the quantity of money and credit in the economy. A great boom resulted, followed soon after by a painful day of reckoning. None of America's depressions prior to 1929, however, lasted more than four years and most of them were over in two. The Great Depression lasted for a dozen years because the government compounded its monetary errors with a series of harmful interventions. But how exactly did the government inflate the economy, and how did that cause the boom and inevitable bust?

Monetary Policy, Interest Rates, and the Business Cycle

The key to understanding how the government's policies caused the initial boom and bust of the Great Depression lies in understanding how businessmen and investors use interest rates to decide how and when to spend their money.

Investors rely on interest rates to gauge the level of risk for various investments. In simplistic terms, a relatively low interest rate for a given loan signals to potential investors that taking out the loan is probably a safe bet; a high interest rate, on the other hand, signals to investors that money can bet better invested elsewhere. The government's expansion of the money supply artificially reduces and thus falsifies the interest rates, and thereby misguides businessmen in their investment decisions.

The government's expansion of the money supply artificially reduces and thus falsifies interest rates. In the belief that declining rates indicate growing supplies of capital savings, investors embark upon new production projects. The creation of money gives rise to an economic boom. It causes prices to rise, especially prices of capital goods used for business expansion.

The costs of capital goods used for business expansion soar ever higher until business is no longer profitable. It is at this point that the decline begins. In order to prolong the boom, the monetary authorities may continue to inject new money until finally, frightened by the prospects of a run-away inflation, they being to contract the money supply. The boom that was built on the quicksand of inflation then comes to a sudden end.

The ensuing recession is a period of repair and readjustment. Prices and costs adjust anew to consumer choices and preferences.

Most importantly, interest rates readjust to reflect once more the actual supply of and demand deposits in savings. The malinvestments are abandoned or written down. Business costs are reduced through through various means until business can once more be profitably conducted, capital investments earn interest, and the market economy functions smoothly again.

Changes in the supply of money in the economy do have an effect on economic activity. This effect works through the fluctuations of interest rates, which in turn cause fluctuations in business activity.

When money is provided to the market in the form of credit expansion through the banking system, business firms erroneously view this as an increase in the supply of capital. Due to the decreased interest rate in the loan market brought about by the fictitious "increase" in capital, businesses increase their investments in long-range projects that appear profitable.

In addition, other factors as well can cause a discrepancy between the natural rate of interest and the rate which is paid in the loan market. Government policies with regard to debt creation, monetization, bank deposit guarantees, and taxation, can effectively externalize the risk associated with running budget deficits, thus artificially lowering loan rates in the market.

Either of these two influences on interest rates, or a combination of the two, can and do influence economic activity by inducing businesses to make investments that would otherwise not be made. Since real savings in the economy, however, do not increase due to these interventionist measures, there is no real money for businesses to finance the supplies and workers needed for production and growth. And thus the business boom must ultimately give way to a bust.

The Artificial Boom of the Roaring 20's

Now that you can see how manipulations of interest rates and money supply can affect the economy, we can take a look at the boom and bust business cycle leading up to the Great Depression.

The spectacular crash of 1929 followed five years of significant credit expansion by the Federal Reserve System under the Coolidge Administration. In 1924, after a sharp decline in business, the Reserve banks suddenly created some $500 million in new credit, which led to a bank credit expansion of over $4 billion in less than one year.

While the immediate effects of this new powerful expansion of the nation's money and credit were seemingly beneficial, initiating a new economic boom and effacing a 1924 decline, the ultimate outcome was most disastrous. It was the beginning of a monetary policy that led to the stock market crash in 1929 and the following depression.

Signifiant credit expansion under the Coolidge Administration was the beginning of a monetary policy that led to the crash in 1929.

The Federal Reserve System launched a further burst of inflation in 1927, the result being that total currency outside banks plus demand and time deposits in the United States increased from $44.51 billion at the end of June, 1924, to $55.17 billion in 1929. The volume of farm and urban mortgages expanded from $16.8 billion in 1921 to $27.1 billion in 1929.

Similar increases occurred in industrial, financial, and state and local government indebtedness. This expansion of money and credit was accompanied by rapidly rising real estate and stock prices. Prices for industrial securities, according to Standard & Poor's common stock index, rose from 59.4 in June of 1922 to 195.2 in September of 1929. Railroad stock climbed from 189.2 to 446.0, while public utilities rose from 82.0 to 375.

The flood of easy money drove interest rates down, pushed the stock market to dizzy heights, and thus gave birth to the "Roaring Twenties."

The Inevitable Bust

As the boom matured, business costs rose, interest rates began to readjust upward, and profits began to fall. The easy-money effects of the expansion wore off, and the monetary authorities, fearing price inflation, slowed the growth of the money supply. The manipulation was enough to knock out the shaky supports from underneath the economic house of cards.

After a failed attempt at stabilization in 1928, the Federal Reserve System finally abandoned its easy money policy at the beginning of 1929. It sold government securities and thereby halted the bank credit expansion. It raised its discount rate to 6% in August, 1929. Time-money rates rose to 8%, commercial paper rates to 6%, and call rates to the panic figures of 15% and 20%. The American economy was beginning to readjust to fair value levels. In June, 1929, business activity began to recede. Commodity prices began their retreat in July.

The security market reached its high on September 19 and then, under the pressure of early selling, slowly began to decline. For five more weeks the public nevertheless bought heavily on the way down. More than 100 million shares were traded at the New York Stock Exchange in September. Finally it dawned upon more and more stockholders that the trend had changed.

The deflation following the inflation wrenched the economy from tremendous boom to colossal bust.

By early 1929, the Federal Reserve was taking the punch away from the party. It choked off the money supply, raised interest rates, and for the next three years presided over a money supply that shrank by 30%. This deflation following the inflation wrenched the economy from tremendous boom to colossal bust.

Only the sharpest financers saw that the party was coming to an end before most other Americans did. Some even began selling stocks and buying bonds and gold as early as 1928. As Joseph Kennedy said, "only a fool holds out for the top dollar."

When the masses of investors caught up with forward-looking financers like Kennedy, they sensed the change in Fed policy, and the stampede was underway. The stock market, after nearly two months of moderate decline, plunged on "Black Thursday"-October 24, 1929-as the pessimistic view of large and knowledgeable investors spread.

After the crash in 29, the masses rushed on the banks to withdraw their money. The pressure on banks was great and tended not to decrease with the passage of time. In 1929, 659 banks failed; in 1930, 1,352; in 1931, 2,294, and in 1932, 1,456.

2. Hoover's Anti-Adjustment Policies

We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and the Congress of the most gigantic program of economic defense and counter attack ever evolved in the history of the Republic. -Herbert Hoover

If this crash had been like previous ones, the subsequent hard times might have ended in a year or two. But unprecedented political bungling, starting with the policies of President Herbert Hoover, prolonged the misery for twelve long years.

Unemployment in 1930 averaged a mildly recessionary 8.9%, up from 3.2% in 1929. It shot up rapidly until peaking out at more than 25% in 1933. Until March 1933, these were the years of President Herbert Hoover.

Hoover's interventionist policies prevented the natural readjustment of the market.

But, as we'll see, Hoover's interventionist policies prevented the natural readjustment of the market. He not only signed the Smoot-Hawley Tariff, which we'll cover in the next section, but also encouraged businessmen to artificially prop up wages, expanded government spending, set up all manner of government lending facilities, and increased the budget deficit. Along with the Federal Reserve System's failure to do its job, resulting in a 30% drop in the money supply, Hoover's interventions were responsible for turning what might have been a severe but swift recession into the Great Depression.

The Smoot-Hawley Tariff Act

The Hoover administration passed the Smoot-Hawley Tariff in June 1930. The most protectionist legislation in U.S. history, Smoot-Hawley aimed to prop up prices in the American economy by keeping foreign products out.

The Act raised American tariffs to unprecedented levels, which practically closed our borders to foreign goods. According to most economic historians, this was the crowning folly of the whole period from 1920 to 1933 and the beginning of the real depression.

"Once we raised our tariffs," wrote Benjamin Anderson,

an irresistible movement all over the world to raise tariffs and to erect other trade barriers, including quotas, began. Protectionism ran wild over the world. Markets were cut off. Trade lines were narrowed. Unemployment in the export industries all over the world grew with great rapidity. Farm prices in the United States dropped sharply through the whole of 1930, but the most rapid rate of decline came following the passage of the tariff bill.

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.

Foreign companies and their workers were flattened by Smoot-Hawley's steep tariff rates.

Foreign companies and their workers were flattened by Smoot-Hawley's steep tariff rates, and foreign governments soon retaliated with trade barriers of their own. With their ability to sell in the American market severely hampered, they curtailed their purchases of American goods.

American agriculture was particularly hard hit. With a stroke of the presidential pen, farmers in this country lost nearly a third of their markets. Farm prices plummeted and tens of thousands of farmers went bankrupt. With the collapse of agriculture, rural banks failed in record numbers, dragging down hundreds of thousands of their customers.

Agricultural commodity prices, which had been well above the 1926 base before the crisis, dropped to a low of 47 in the summer of 1932. Crashing prices plunged hundreds of thousands of farmers into bankruptcy. Farm mortgages were foreclosed until various states passed moratoria laws, thus shifting the bankruptcy to countless creditors.

American exports fell from $5.5 billion in 1929 to $1.7 billion in 1932. American agriculture customarily had exported over 20% of its wheat, 55% of its cotton, 40% of its tobacco and lard, and many other products. When international trade and commerce were disrupted, American farming collapsed. In fact, the rapidly growing trade restrictions, including tariffs, quotas, foreign exchange controls, and other devices were generating a world-wide depression.

Hoover's Taxes, Subsidies, and Relief Schemes

Hoover dramatically increased government spending for subsidy and relief schemes. In the space of one year alone, from 1930 to 1931, the federal government's share of GNP increased by about one-third.

President Hoover called together the nation's industrial leaders and pledged them to adopt his program to maintain wage rates and expand construction. He sent a telegram to all the governors, urging cooperative expansion of all public works programs. He expanded Federal public works and granted subsidies to ship construction.

And for the benefit of the suffering farmers, a host of Federal agencies embarked upon price stabilization policies that generated ever larger crops and surpluses which in turn depressed product prices even further. Economic conditions went from bad to worse and unemployment in 1932 averaged 12.4 million.

In this dark hour of human want and suffering, the Federal government struck a final blow. The Revenue Act of 1932 doubled the income tax, the sharpest increase in the Federal tax burden in American history. Under the new Revenue Act:

Tax exemptions were lowered.

"Earned income credit" was eliminated.

Normal tax rates were raised from a range of 1.5% to 5% to a range of 4% to 8%.

Surtax rates were raised from 20% to a maximum of 55%.

Corporation tax rates were boosted from 12% to 13.75 and 14.5%.

Estate taxes were raised.

Gift taxes were imposed with rates from .75 to 33.5%.

On top of all these, a 10% gasoline tax was imposed, a 3% automobile tax, a telegraph and telephone tax, a 2¢ check tax, and many other excise taxes. And, finally, postal rates were increased substantially.

When state and local governments faced shrinking revenues, they, too, joined the Federal government in imposing new levies. The rate schedules of existing taxes on income and business were increased and new taxes imposed on business income, property, sales, tobacco, liquor, and other products.

Murray Rothbard, in his authoritative work on America's Great Depression (Van Nostrand, 1963), estimates that the fiscal burden of Federal, state, and local governments nearly doubled during the period, rising from 16% of net private product to 29%. This blow alone would bring any economy to its knees.

3. The New Deal: FDR's Interventionism

Soon after Herbert Hoover assumed the presidency in 1929, the economy began to decline, and between 1930 and 1933 the contraction assumed catastrophic proportions never experienced before or since in the United States. Disgusted by Hoover's inability to stem the collapse, in 1932 the voters elected Franklin Delano Roosevelt, along with a heavily Democratic Congress, and set in motion the radical restructuring of government's role in the economy known as the New Deal.

Roosevelt was undeterred by the failure of the Hoover programs to achieve their object. So far as they considered them in that light at all, the New Dealers thought the Hoover effort was too timid and much too piecemeal. In any case, they were much more convinced of the healing powers of monetary inflation than Hoover had been.

The most prominent of the New Deal programs were supposed to deal with economic problems arising from the Great Depression. Most of them were put forward as remedies for depression-related conditions, many of them in an emergency atmosphere. But rather than cure the depression, they plunged it to new depths.

The New Deal's Central Planning: NRA and AAA

One of the great attributes of the private-property market system is its inherent ability to overcome almost any obstacle. Through price and cost readjustment, managerial efficiency and labor productivity, new savings and investments, the market economy tends to regain its equilibrium and resume its service to consumers. It doubtless would have recovered in short order from the Hoover interventions had there been no further tampering.

However, when President Franklin Delano Roosevelt assumed the Presidency, he, too, fought the economy all the way. Instead of clearing away the prosperity barriers erected by his predecessor, he built new ones of his own. He struck in every known way at the integrity of the U.S. dollar through monetary expansion schemes. He seized the people's gold holdings and subsequently devalued the dollar by 40%.

With some third of industrial workers unemployed, President Roosevelt embarked upon sweeping industrial reorganization. He persuaded Congress to pass the National Industrial Recovery Act (NIRA), which set up the National Recovery Administration (NRA).

Roosevelt persuaded Congress to pass the National Industrial Recovery Act (NIRA), which set up the National Recovery Administration (NRA).

The professed purpose of the NRA was to get business to regulate itself, ignoring the antitrust laws and developing fair codes of prices, wages, hours, and working conditions. The President's Re-employment Agreement called for a minimum wage of 400 an hour ($12 to $15 a week in smaller communities), a 35-hour work week for industrial workers and 40 hours for white collar workers, and a ban on all youth labor.

This was a naive attempt at "increasing purchasing power" by increasing payrolls. But, the immense increase in business costs through shorter hours and higher wage rates worked naturally as an anti revival measure. After passage of the Act, unemployment rose to nearly 13 million. The South, especially, suffered severely from the minimum wage provisions: the Act forced 500,000 Blacks out of work.

These National Recovery Administration codes were typically concerned with restricting competition within an industry, reducing hours of labor, and raising prices and wages. Employers were usually forbidden to employ children under 16 years old. A minimum wage throughout the industry and a work week of 40 hours were ordinarily specified. Further, the Cotton Textile Code, for example, forbade employers to use "productive machinery in the cotton textile industry for more than two shifts of 40 hours per week." Planning was supposed to be accomplished by the companies and workers acting in concert with government.

Nor was it simply major industries that were governed by codes initially; any and every sort of undertaking was included.

Code 450 regulated the Dog Food Industry

Code 427regulated the Curled Hair Manufacturing Industry and Horse Hair Dressing Industry

Code 262 regulated the Shoulder Pad Manufacturing Industry.

In New York, I. 'Izzy' Herk, executive secretary of Code 348, brought order to the Burlesque Theatrical Industry by insisting that no production could feature more than four strips.

President Roosevelt also attempted to address the disaster that had befallen American agriculture. He attacked the problem by passage of the Farm Relief and Inflation Act, popularly known as the First Agricultural Adjustment Act (AAA).

The objective was to raise farm income by cutting the acreages planted or destroying the crops in the field, paying the farmers not to plant anything, and organizing marketing agreements to improve distribution. The program soon covered not only cotton, but also all basic cereal and meat production as well as principal cash crops. The enormous costs of the program were to be covered by a new "processing tax" levied on an already depressed industry.

The AAA was expected to do for agriculture much the same sort of thing that NRA would for industry, only more. Farmers were reckoned to be in much worse condition than manufacturers and industrial workers. The first task with them, according to the planners, was to bring farm income up to a "parity" (as it was called) with industrial income.

The AAA was expected to do for agriculture much the same sort of thing that NRA would for industry, only more.

The years 1909-1914 were chosen as a base for most farm staple products, and the aim was to raise farm prices to a level that would give them an income equivalent to the ratio between farm and industry that prevailed in the base period.

The main device for accomplishing this was reduction of production of staples. So dramatic was the need for reduction, New Dealers thought, that a considerable portion of the 1933 cotton crop was plowed up and destroyed, and many small pigs put to death.

Thereafter, farmers were induced to plant less by government subsidies for those who "cooperated." Under the first AAA (1933-1936), the money to pay for the various benefits paid to farmers came from a tax on processors. Many farmers had long believed, of course, that the middlemen got the profits from their endeavors. The New Deal gave this spurious notion legal standing by levying the tax.

NRA codes and AAA processing taxes came in July and August of 1933. Again, economic production which had flurried briefly before the deadlines, sharply turned downward. The Federal Reserve index dropped from 100 in July to 72 in November of 1933.

The thrust of the NRA and AAA was in the opposite direction from what was needed. If people have material needs, are unemployed or underemployed, the solution for them is either to produce for themselves what they need or produce for sale in the market enough of what is wanted to be able to buy what they need. These things require more, not less, production and changes in production activities, not the freezing of them into patterns of the past.

The thrust of the NRA and AAA was in the opposite direction from what was needed.

That is not to say that government would have had greater success in planning increased production. Some things were already being produced in greater quantities than could be profitably produced for the market. Any general effort to solve the problem was doomed to failure, for the problem was one of individuals, families, and other producing units. Only they could solve it.

The Supreme Court, by unanimous decision, outlawed NRA in 1935 and AAA in 1936. The Court maintained that the Federal legislative power had been unconstitutionally delegated and states' rights violated. These two decisions removed some fearful handicaps under which the economy was laboring.

The NRA in particular was a nightmare with continuously changing rules and regulations by a host of government bureaus. Above all, voidance of the act immediately reduced labor costs and raised productivity as it permitted labor markets to adjust. The death of AAA reduced the tax burden of agriculture and halted the shocking destruction of crops. Unemployment began to decline. In 1935 it dropped to 9.5 million, or 18.4% of the labor force, and in 1936 to only 7.6 million, or 14.5%.

Inflation and Pump-Priming Measures

When the economic planners saw their plans go wrong, they simply prescribed additional doses of Federal pump priming. In his January 1934 Budget Message, Mr. Roosevelt promised expenditures of $10 billion while revenues were at $3 billion. Yet, the economy failed to revive; the business index rose to 86 in May of 1934, and then turned down again to 71 by September. Furthermore, the spending program caused a panic in the bond market which cast new doubts on American money and banking.

The New Dealers held generally that the depression was caused by a shortage of purchasing power, or, at the least, a shortage in the hands of those who would spend it. In the most obvious sense, there was some sort of shortage of purchasing power by those who had great difficulty in providing for their most direct wants.

That is, there was food, clothing, shoes, and other goods available in stores. Yet, many people had to resort to charitable aid to get the wherewithal to live. Surely, they lacked the purchasing power to buy the goods.

They did not lack money-money, per se, is not purchasing power. Money is a medium of exchange. It is, then, a medium through which purchasing power is exercised.

A shortage of purchasing power is not a shortage of money-it's a shortage of goods.

The idea that pumping new money stimulates the economy stems from the idea that money itself is what gives people purchasing power. The problem is that purchasing power is not merely money; it is, in fact, real goods or services. Ultimately, all exchanges are of goods for goods. In a money economy, goods are exchanged for money, and money is then exchanged for other goods. A shortage of purchasing power, then, is in fact a shortage of goods.

Operating on the idea that purchasing power is money, the New Dealers simply printed more money in the hopes of restoring purchasing power to the underemployed masses. But this policy amounts to a trade in which money is exchanged not for goods, but for nothing at all.

The problem is that trading with a shortage of goods is not a normal market phenomenon at all. It occurs only as a result of a large scale intervention in the market through credit expansion fueled by debt; this process is known as inflation. Monetized debt, or inflation, is based not on trading goods for goods, but on trading goods for the promise of goods that don't exist yet, but will be produced in the future. It is nothing other than a promise of future production.

Flooding the economy with money that has not been traded for real goods introduces a whole set of temporary imbalances in the economy. There is a trade imbalance because the goods to be traded for other goods have not yet been produced. There is a price imbalance because prices are no longer in proportion to the money supply. There is a shortfall of real purchasing power (i.e., goods and services). In the wake of the credit expansion there will be an imbalance of production, for many producers will be induced to increase their production, and even their facilities for production, for there are many willing buyers with the money, it seems, to pay for their wares.

The imbalances resulting from any single monetary expansion, however large, will be only temporary. The market tends always toward balance, and if people are free to operate the market, balance will be restored. Prices will rise to compensate for the increase in the money supply. People will generally pay their debts out of production, if they can, and the trade imbalance will be restored.

However, at this stage the shortage of purchasing which was there at the outset will become obvious. Much of production must go into repaying debts. Moreover, even when the debts are repaid, there may need to be a further interval for savings to be made before many new purchases can be made. Many plants may lie idle, and there will be a depression. The adjustments that must be made to restore the balance are often difficult and unpleasant.

The impact of all these multitudinous measures - industrial, agricultural, financial, monetary, and other - upon a bewildered industrial and financial community was extraordinarily heavy. We must add the effect of continuing disquieting utterances by the President. He had castigated the bankers in his inaugural speech. He had made a slurring comparison of British and American bankers in a speech in the summer of 1934... That private enterprise could survive and rally in the midst of so great a disorder is an amazing demonstration of the vitality of private enterprise. -Benjamin Anderson

4. The Wagner Act and Labor Laws

The third phase of the Great Depression was thus drawing to a close. But there was little time to rejoice, for the scene was being set for another collapse in 1937 and a lingering depression that lasted until the day of Pearl Harbor. More than 10 million Americans were unemployed in 1938, and more than 9 million in 1939.

The Wagner Act of July 5, 1935, radically changed American employment and business. It took legal employer-employee disputes over labor contracts out of the courts of law and brought them under a newly created Federal agency, the National Labor Relations Board, which became prosecutor, judge, and jury, all in one. Labor union sympathizers on the Board further perverted the law that already afforded legal immunities and privileges to labor unions. The U. S. thereby abandoned a great achievement of Western civilization, equality under the law.

The Wagner Act, or National Labor Relations Act (NLRA), was passed in reaction to the Supreme Court's voidance of NRA and its labor codes. It aimed at crushing all employer resistance to labor unions. Any legal defense from an employer became an "unfair labor practice" punishable by the Board. The law not only obliged employers to deal and bargain with the unions designated as the employees' representative; later Board decisions also made it unlawful to resist the demands of labor union leaders.

The NLRA enabled unions to extort higher wages from employers than they could have received in the market.

The NRLA placed the power of government behind the organization of labor unions, mainly by way of the National Labor Relations Board, weighted the legal scales in favor of unions, and signaled a determination by the federal government that unions should prevail. Thereby, unions were able to extort higher wages from employers than they could have received in the market. The differential is a redistribution of wealth from employers to employees.

Following the election of 1936, the labor unions began to make ample use of their new powers. Through threats, boycotts, strikes, seizures of plants, and outright violence committed in legal sanctity, they forced millions of workers into membership. Consequently, labor productivity declined and yet wages were forced upward. Labor strife and disturbance ran wild. Ugly sit down strikes idled hundreds of plants. In the ensuing months economic activity began to decline and unemployment again rose above the ten million mark.

From the White House on the heels of the Wagner Act came a thunderous barrage of insults against business. Businessmen, Roosevelt fumed, were obstacles on the road to recovery. New strictures on the stock market were imposed. A tax on corporate retained earnings, called the "undistributed profits tax," was levied.

The relentless assaults of the Roosevelt administration against business, property, and free enterprise guaranteed that the capital needed to jumpstart the economy was either taxed away or forced into hiding. When Roosevelt took America to war in 1941, he eased up on his anti-business agenda, but a great deal of the nation's capital was diverted into the war effort instead of into plant expansion or consumer goods.

Not until both Roosevelt and the war were gone did investors feel confident enough to "set in motion the postwar investment boom that powered the economy's return to sustained prosperity."

Conclusion

On the eve of America's entry into World War II and twelve years after the stock market crash of Black Thursday, ten million Americans were jobless. Roosevelt had pledged in 1932 to end the crisis, but it persisted two presidential terms and countless interventions later.

Along with the horror of World War II came a revival of trade with America's allies. The war's destruction of people and resources did not help the U.S. economy, but this renewed trade did. More important, the Truman administration that followed Roosevelt was decidedly less eager to berate and bludgeon private investors, and as a result, those investors came back into the economy to fuel a powerful postwar boom.

In the final analysis, the genesis of the Great Depression lay in the inflationary monetary policies of the U.S. government in the 1920s. It was prolonged and exacerbated by a litany of political missteps: trade-crushing tariffs, incentive-sapping taxes, mind-numbing controls on production and competition, senseless destruction of crops and cattle, and coercive labor laws. It was not the free market that produced twelve years of agony; rather, it was political bungling on a scale as grand as there ever was.

# data[].attributes.attachment_link.description
Few areas of historical research have provoked such intensive study as the causes of America's Great Depression-and for good reason. Tens of millions of humans suffered intense misery and despair. How bad was the Great Depression?

# data[].attributes.attachment_link.readable_text
The Great Depression happened far enough in the past that it doesn't seem all that real to today's young scholars. The Depression may occupy space in history books and is certainly a part of standardized curriculum in contemporary history classes, but it is still simply "history" to many. It gets more interesting, though, when you look at the main causes of the Great Depression and then compare these drivers to today's economic indicators. Let's look at the top five causes for the Great Depression - you may begin to see some parallels to the world we live in today.

European Trade Policies: In an effort to protect American interests, the Federal Government passed the Smoot-Hawley Tariff in 1930, with the intention of taxing imported European goods to spur domestic consumption of homegrown products. The high taxes put forward effectively killed trade between America and Europe, and economic retaliation occurred. Today's economic policies toward trade partners are beginning to take on the same confrontational tone seen around the Depression.

The Dust Bowl: This is an often-overlooked cause of the Depression, and the drought conditions witnessed during the Dust Bowl forced many farming families to lose their farms, sell their properties (sometimes at a loss), and relocate to the city to find work. They often couldn't pay their debts and local economies suffered. Farmers today report similar concerns, with many farming families forced to take government subsidies just to keep their businesses alive.

Stock Market Crash of 1929: While most people peg the start of the Great Depression as occurring on October 29, 1929 - the day the stock market tanked, the Depression really began several months later when investors realized their losses were not recovering as they had hoped. The market lost about 7% of its value in a matter of a week during late 1929, and it took years to recover, which can easily be pegged as one of the main causes of the Great Depression. It was simply too much, too quickly - and the Depression took hold. Many feel our current Dow Jones Industrial Average is simply overvalued and that another major market drop is right around the corner.

Consumer Spending: For an economy to thrive, people need to spend money. And after the Stock Market Crash of 1929 and the subsequent years leading up to the New Deal, Americans were simply too scared to spend a dime. This resulted in drastically reduced retail sales and a corresponding reduction in the workforce. Credit defaults on items purchased on credit were rampant, and a high unemployment rate further minimized discretionary income. Interestingly, we're seeing flat spending figures in the US right now - much of it attributed to market insecurity and weak income growth.

Bank Failures: 9,000 domestic banks failed during the Great Depression, and that was before the advent of FDIC. With their life savings at risk, people either lost their money entirely or withdrew it prior to the collapse - thereby hamstringing the financial system. Banks were not willing to make loans, and that led to the self-destruction of thousands of these institutions. Paralleling this concept to today - from 2003 to 2008, five US banks failed. From 2008 to 2012, 465 banks failed. Since 2010, only three new banks have opened across the entire United States.

Causes for the Great Depression was likely due to dozens of underlying issues, but these five represent some of the most compelling drivers of our historic and unprecedented market collapse. Scarily enough, we're starting to see some of the same indicators today. Through it all, investors have hedged against market risk by adding precious metals to their portfolios, and you can do the same by investing in gold, silver, platinum and other tangible commodities. For more information about gold investing, contact American Bullion today.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.

# data[].attributes.attachment_link.title
The Five Main Causes For The Great Depression

# data[].attributes.attachment_link.description
The Great Depression happened far enough in the past that it doesn't seem all that real to today's young scholars. The Depression may occupy space in history books and is certainly a part of standardized curriculum in contemporary history classes, but it is still simply "history" to many.

# data[].attributes.body
https://www.americanbullion.com/the-five-main-causes-for-the-great-depression/

# data[].attributes.body
https://www.youtube.com/watch?v=b0SW3BgwL14

# data[].attributes.body
https://goo.gl/images/f6pLtQ

# data[].attributes.body
https://www.google.com/search?q=herbert+hoover&rlz=1CASMAI_enUS816&source=lnms&tbm=isch&sa=X&ved=0ahUKEwj4q8OS69PdAhUIpFkKHYtjBKUQ_AUIDigB&biw=1366&bih=623&safe=active&ssui=on#imgrc=gSeOHp-SXdnMcM:

# data[].attributes.attachment_link.readable_text
National Archives, Washington, D.C. (12573155)

The Great Depression of the late 1920s and '30s remains the longest and most severe economic downturn in modern history. Lasting almost 10 years (from late 1929 until about 1939) and affecting nearly every country in the world, it was marked by steep declines in industrial production and in prices (deflation), mass unemployment, banking panics, and sharp increases in rates of poverty and homelessness. In the United States, where the effects of the depression were generally worst, between 1929 and 1933 industrial production fell nearly 47 percent, gross domestic product (GDP) declined by 30 percent, and unemployment reached more than 20 percent. By comparison, during the Great Recession of 2007-09, the second largest economic downturn in U.S. history, GDP declined by 4.3 percent, and unemployment reached slightly less than 10 percent.

There is no consensus among economists and historians regarding the exact causes of the Great Depression. However, many scholars agree that at least the following four factors played a role.

The stock market crash of 1929. During the 1920s the U.S. stock market underwent a historic expansion. As stock prices rose to unprecedented levels, investing in the stock market came to be seen as an easy way to make money, and even people of ordinary means used much of their disposable income or even mortgaged their homes to buy stock. By the end of the decade hundreds of millions of shares were being carried on margin, meaning that their purchase price was financed with loans to be repaid with profits generated from ever-increasing share prices. Once prices began their inevitable decline in October 1929, millions of overextended shareholders fell into a panic and rushed to liquidate their holdings, exacerbating the decline and engendering further panic. Between September and November, stock prices fell 33 percent. The result was a profound psychological shock and a loss of confidence in the economy among both consumers and businesses. Accordingly, consumer spending, especially on durable goods, and business investment were drastically curtailed, leading to reduced industrial output and job losses, which further reduced spending and investment.

Banking panics and monetary contraction. Between 1930 and 1932 the United States experienced four extended banking panics, during which large numbers of bank customers, fearful of their bank's solvency, simultaneously attempted to withdraw their deposits in cash. Ironically, the frequent effect of a banking panic is to bring about the very crisis that panicked customers aim to protect themselves against: even financially healthy banks can be ruined by a large panic. By 1933 one-fifth of the banks in existence in 1930 had failed, leading the new Franklin D. Roosevelt administration to declare a four-day " bank holiday" (later extended by three days), during which all of the country's banks remained closed until they could prove their solvency to government inspectors. The natural consequence of widespread bank failures was to decrease consumer spending and business investment, because there were fewer banks to lend money. There was also less money to lend, partly because people were hoarding it in the form of cash. According to some scholars, that problem was exacerbated by the Federal Reserve, which raised interest rates (further depressing lending) and deliberately reduced the money supply in the belief that doing so was necessary to maintain the gold standard (see below), by which the U.S. and many other countries had tied the value of their currencies to a fixed amount of gold. The reduced money supply in turn reduced prices, which further discouraged lending and investment (because people feared that future wages and profits would not be sufficient to cover loan payments).

The gold standard. Whatever its effects on the money supply in the United States, the gold standard unquestionably played a role in the spread of the Great Depression from the United States to other countries. As the United States experienced declining output and deflation, it tended to run a trade surplus with other countries because Americans were buying fewer imported goods, while American exports were relatively cheap. Such imbalances gave rise to significant foreign gold outflows to the United States, which in turn threatened to devalue the currencies of the countries whose gold reserves had been depleted. Accordingly, foreign central banks attempted to counteract the trade imbalance by raising their interest rates, which had the effect of reducing output and prices and increasing unemployment in their countries. The resulting international economic decline, especially in Europe, was nearly as bad as that in the United States.

Decreased international lending and tariffs. In the late 1920s, while the U.S. economy was still expanding, lending by U.S. banks to foreign countries fell, partly because of relatively high U.S. interest rates. The drop-off contributed to contractionary effects in some borrower countries, particularly Germany, Argentina, and Brazil, whose economies entered a downturn even before the beginning of the Great Depression in the United States. Meanwhile, American agricultural interests, suffering because of overproduction and increased competition from European and other agricultural producers, lobbied Congress for passage of new tariffs on agricultural imports. Congress eventually adopted broad legislation, the Smoot-Hawley Tariff Act (1930), that imposed steep tariffs (averaging 20 percent) on a wide range of agricultural and industrial products. The legislation naturally provoked retaliatory measures by several other countries, the cumulative effect of which was declining output in several countries and a reduction in global trade.

Just as there is no general agreement about the causes of the Great Depression, there is no consensus about the sources of recovery, though, again, a few factors played an obvious role. In general, countries that abandoned the gold standard or devalued their currencies or otherwise increased their money supply recovered first (Britain abandoned the gold standard in 1931, and the United States effectively devalued its currency in 1933). Fiscal expansion, in the form of New Deal jobs and social welfare programs and increased defense spending during the onset of World War II, presumably also played a role by increasing consumers' income and aggregate demand, but the importance of this factor is a matter of debate among scholars.

# data[].attributes.attachment_link.description
What brought about the worst economic downturn in modern history?

# data[].attributes.attachment_link.readable_text
The Great Depression was a period of unprecedented decline in economic activity. It is generally agreed to have occurred between 1929 and 1939. Although parts of the economy had begun to recover by 1936, high unemployment persisted until the Second World War.

Background To Great Depression:

The 1920s witnessed an economic boom in the US (typified by Ford Motor cars, which made a car within the grasp of ordinary workers for the first time). Industrial output expanded very rapidly.

Sales were often promoted through buying on credit. However, by early 1929, the steam had gone out of the economy and output was beginning to fall.

The stock market had boomed to record levels. Price to earning ratios were above historical averages.

The US Agricultural sector had been in recession for many more years

The UK economy had been experiencing deflation and high unemployment for much of the 1920s. This was mainly due to the cost of the first world war and attempting to rejoin the Gold standard at a pre-world war 1 rate. This meant Sterling was overvalued causing lower exports and slower growth. The US tried to help the UK stay in the gold standard. That meant inflating the US economy, which contributed to the credit boom of the 1920s.

Causes of Great Depression

1. Stock Market Crash of October 1929

During September and October, a few firms posted disappointing results causing share prices to fall. On October 28th (Black Monday), the decline in prices turned into a crash has share prices fell 13%. Panic spread throughout the stock exchange as people sought to unload their shares. On Tuesday there was another collapse in prices known as 'Black Tuesday'. Although shares recovered a little in 1930, confidence had evaporated and problems spread to the rest of the financial system. Share prices would fall even more in 1932 as the depression deepened. By 1932, The stock market fell 89% from its September 1929 peak. It was at a level not seen since the nineteenth century.

Falling share prices caused a collapse in confidence and consumer wealth. Spending fell and the decline in confidence precipitated a desire for savers to withdraw money from their banks.
2. Bank Failures
In the first 10 months of 1930 alone, 744 US banks went bankrupt and savers lost their savings. In a desperate bid to raise money, they also tried to call in their loans before people had time to repay them. As banks went bankrupt, it only increased the demand for other savers to withdraw money from banks. Long queues of people wanting to withdraw their savings was a common sight. The authorities appeared unable to stop bank runs and the collapse in confidence in the banking system. Many agree, that it was this failure of the banking system which was the most powerful cause of economic depression.

Because of the banking crisis, Banks reduced lending, there was a fall in investment. People lost savings and so reduced consumer spending. The impact on economic confidence was disastrous.

Great Depression in US

Over 20% fall in US real GDP

Four consecutive years of negative growth 1929-32.

US unemployment rose from zero in 1929 to over 25% in 1932 - indicating the severity and seriousness of the decline in economic activity.

US Deflation

Great Depression in the UK

The great depression in the UK was less severe because

There had been no boom in the 1920s (it was actually a period of low growth)

After leaving the Gold Standard in 1932, the UK economy recovered relatively well.

The UK also experienced a long period of deflation in the 1920s and 1930s. See: History of inflation

With falling output, prices began to fall. Deflation created additional problems.

It increased the difficulty of paying off debts taken out during the 1920s.

Falling prices encouraged people to hoard cash rather than spend (Keynes called this the paradox of thrift)

Increased real wage unemployment (workers reluctant to accept nominal wage cuts, caused real wages to rise creating additional unemployment)

Unemployment and Negative Multiplier Effect
As banks went bankrupt, consumer spending and investment fell dramatically. Output fell, unemployment rose causing a negative multiplier effect. In the 1930s, the unemployment received little relief beyond the soup kitchen. Therefore, the unemployed dramatically reduced their spending.

Global Downturn

America had lent substantial amounts to Europe and UK, to help rebuild after first world war. Therefore, there was a strong link between the US economy and the rest of the world. The US downturn soon spread to the rest of the world as America called in loans, Europe couldn't afford to pay back. This global recession was exacerbated by imposing new tariffs such as Smoot-Hawley which restricted trade further.

Different views of the Great Depression

Monetarists View

Monetarists highlight the importance of a fall in the money supply. They point out that between 1929 and 1932, the Federal Reserve allowed the money supply (Measured by M2) to fall by a third. In particular, Monetarists such as Friedman criticise the decisions of the Fed not to save banks going bankrupt. They say that because the money supply fell so much an ordinary recession turned into a major deflationary depression.

Austrian View

The Austrian school of Economists such as Hayek and Ludwig Von Mises place much of the blame on an unsustainable credit boom in the 1920s. In particular, they point to the decision to inflate the US economy to try and help the UK remain on the Gold standard at a rate which was too high. They argue after this unsustainable credit boom a recession became inevitable. The Austrian school doesn't accept the Friedman analysis that falling money supply was the main problem. They argue it was the loss of confidence in the banking system which caused the most damage.

Keynesian View

Keynes emphasised the importance of a fundamental disequilibrium in real output. He saw the Great Depression as evidence that the classical models of economics were flawed.

Classical economics assumed Real Output would automatically return to equilibrium (full employment levels), but the great depression showed this to be not true.

Keynes said the problem was lack of aggregate demand. Keynes argued passionately that governments should intervene in the economy to stimulate demand through public works scheme - higher spending and borrowing.

Keynes heavily criticised the UK government's decision to try balance the budget in 1930 through higher taxes and lower benefits. He said this only worsened the situation.

Keynes also pointed to the paradox of thrift.

Marxist View
The Marxist View saw the Great Depression as heralding the imminent collapse of global capitalism. With unemployment over 25%, Marxists held that this showed the inherent instability and failure of the capitalist model. Furthermore, they pointed to the Soviet Union as a country which was able to overcome the great depression through state-sponsored economic planning.

How important was Stock Market Crash of 1929?

The stock market crash of October 1929, was certainly a factor which precipitated events. It did cause a decline in wealth and severely affected confidence. However, changes in share prices were a reflection of the underlying boom and bust in the economy. Also, a collapse in share prices might not have caused the great depression if bank failures had been avoided. In October 1987, share prices fell by even more (22%) than black Monday. But, it didn't cause an economic recession.

Essays on the Great Depression by Ben S. Bernanke at Amazon.co.uk
Essays on the Great Depression by Ben S. Bernanke at Amazon.com

# data[].attributes.attachment_link.description
The Great Depression was a period of unprecedented decline in economic activity. It is generally agreed to have occurred between 1929 and 1939. Although parts of the economy had begun to recover by 1936, high unemployment persisted until the Second World War.

# data[].attributes.body
https://www.history.com/topics/great-depression/1929-stock-market-crash

# data[].attributes.attachment_link.readable_text
The Great Depression was one of the most important events in the economic history of the United States. This depression started in late 1929 and lasted for almost a decade. The effects of the Great Depression were seen throughout the world. Most industrialized nations were badly hit by this economic depression. Many factors contributed in causing the Great Depression. However, one of the main reasons behind the Great Depression was a combination of a highly unequal distribution of wealth in 1920s, and the extensive stock market speculation that occurred during the late 1920s. Money was distributed disparately between the middle-class and the rich, between agriculture and industry within the United States and between Europe and the U.S. This unbalanced wealth distribution created an unstable economy. The stock market was artificially kept high due to the excessive speculation in the late 1920s. However, it eventually led to huge market crashes. These market crashes along with misdistribution of wealth resulted in the economical depression in America.

Great Depression: Causes

Stock Market Crash of 1929: The stock market crash took place on Black Tuesday, October 29, 1929. It was one of the major causes that led to the Great Depression. Two months after the original crash, the stockholders had lost more than 40 billion dollars. By the end of 1930s, the stock market started to regain some of its losses. However, it was not sufficient and America was in the state of the Great Depression. This situation was worsened by firming of money rates to the commercial interests.

Bank Failures: Throughout the 1930s, a huge bank failure took place and more than 9,000 banks failed. Most bank deposits were uninsured. As a result, a number of people lost their savings due to the bank failures. Because of uncertain economic situation and problems of bank survival, people were not willing to go for new loans.

Reduction in Purchasing Across the Board: With the stock market crash and fears of economic woes, people from all classes stopped purchasing any items and avoided expenditures. As a result, production of a number of items was decreased. It ultimately resulted in a reduction in the workforce. As numerous people lost their jobs, they were unable to pay for the items they had bought on installment plans. As a result, their items were repossessed. There was an accumulation of more inventories. About 25% of people were unemployed.

American Economic Policy with Europe: As the businesses begin to fail, the government created the Hawley-Smoot Tariff in the year 1930 in order to help protect the American companies. A higher tax was charged for the imports, leading to a reduced trade between the U.S. and the foreign countries.

Drought Conditions: The drought that occurred in the Mississippi Valley in 1930 is also regarded as one of the major causes of the Great Depression (though not a direct cause). As a result, several people were not able to pay their taxes due to other debts. Therefore, they had to sell their farms without gaining any profit. They moved to the cities in search of jobs. Many farmers lived on charity, along with their families.

The Great Depression affected not only the American economy, but also the economy of entire world. I hope the above information was of help to you.

# data[].attributes.attachment_link.description
The Great Depression was the worst economic decline in the history of the United States, with a disastrous impact on the rest of the world. There are certain causes for this economic depression. Read on to know more about the causes of the Great Depression.

# data[].attributes.body
https://jobs.lovetoknow.com/Unemployment_During_the_Great_Depression

# data[].attributes.body
http://www.english.illinois.edu/maps/depression/depression.htm

# data[].attributes.attachment_link.readable_text
Limits of Prosperity

From the turn of the century through the late 1920s, the United States enjoyed a period of economic prosperity. From 1922 to 1929, the gross national product, or the value of goods produced during the fiscal year, grew at an annual rate of 5%; the gross domestic product measured in at over $200 billion, and wages (for some) skyrocketed by 15%. Additionally, unemployment during the period never surpassed 5%.

However, on 'Black Tuesday' (October 29, 1929), the Wall Street stock market crashed and entrenched the United States in the Great Depression, the nation's lengthiest economic downturn, from 1929 to 1941. Within a few short months after the initial crash, stock prices collapsed by 50%. They would eventually fall an additional 30% at the peak of the Depression. Industrial output significantly contracted. Banks, unable to sustain business, closed and left thousands of Americans without money. Those who had invested in the market had lost everything. To make matters worse, unemployment reached 25% during the Depression years. Americans did what they could to survive, such as waiting in line at soup kitchens, scouring garbage cans and theft. How could such a prosperous nation fall into economic despair? Let's take a look at the factors that contributed to the Great Depression.

Rampant Speculation

Throughout the 1920s, stock market speculation, or assuming the future success or failure of stocks, ran rampant throughout the United States. As a result, by the end of the decade, many investors had purchased massive shares of stock, but mainly through loans and a minimum investment of roughly 10%. Most assumed that once the prices on stock rose, they would be able to withdraw their earnings, pay back their loans and be left with a net profit. Most investors shared their method and infused thousands of borrowed dollars into the stock market on various industries and products that did not have time to mature and be considered a proven, even valuable, commodity.

The major influx of investor money into the stock market caused prices to collapse as the market became far too saturated. Simultaneously, creditors who had supplied loans to investors began demanding the repayment of the loans after witnessing market earnings begin to spiral downward. Without the money being repaid to the creditors, the financial structure of the United States crumbled.

Consumer Credit

Another financial issue that contributed to the collapse of the market was consumer credit and installment loans. The 1920s represented a boom in durable consumer goods, such as vacuum cleaners, refrigerators, radios, automobiles and farm equipment. Most Americans did not have the available cash to pay for the products, so banks and businesses decided to offer what became known as credit. Consumers were able to purchase an item, but pay for it over time (they also had to pay interest on the good). The problem was that many Americans could not afford the credit payments and defaulted on loans and installment plans. Over time, banks and businesses lost a substantial amount of money, which in turn helped contribute to the market difficulties. It became worse in 1931, when the Federal Reserve Board decided to curtail credit and raise interest rates on current consumers. Americans especially struggled to pay for items after the misguided decision.

Failure of Leadership

While all of the aforementioned financial problems contributed to the collapse of the economic market, the failure of leadership by American presidents during the 1920s may have been the foremost catalyst to the Great Depression. During the period, the White House was occupied by the New Era Republicans - President Warren Harding, President Calvin Coolidge and President Herbert Hoover. These individuals projected pro-business politics and, in Harding's words, a 'return to normalcy.' These Republican presidents believed in supporting big business because it would provide prosperity for the nation.

# data[].attributes.attachment_link.keywords[]
the great depression: the wall street crash of 1929 and other causes - video & lesson transcript | study.com

# data[].attributes.attachment_link.title
The Great Depression: The Wall Street Crash of 1929 and Other Causes - Video & Lesson Transcript | Study.com

# data[].attributes.attachment_link.description
From the turn of the century through the late 1920s, the United States enjoyed a period of economic prosperity. From 1922 to 1929, the gross national product, or the value of goods produced during the fiscal year, grew at an annual rate of 5%; the gross domestic product measured in at over $200 billion, and wages (for some) skyrocketed by 15%.

# data[].attributes.attachment_link.title
great depression stock market crash - Google Search

# data[].attributes.attachment_link.description
black tuesday great depression stock market crash