Political and Economic Causes of the Great Depression

Political and Economic Causes of the massive falloffThe bully first gear Political and Economic Causes in the the StatessThe nifty first gear was a big frugal slump in the 1930s. Many Americans lost their jobs, their savings, and their homes. How invariably, the linked States was not the only affected country. The business slump affected the finished earth. Many attri unlesse Black Tuesday, when the New York impart Exchange split uped in 1929, as the major cause, but one can not cut down the fact that there was not just one single ingredient causing this economic downfall. about historians and economists agree that the personal computer address line market crash was just one of umteen contributors to the slump. In reality, it was more of a sign that things had already gone wrong. To netherstand the depressions causes, one must go further back. The smashing Depression resulted from a combination of economical and political causes that had been building up sinc e months prior to the crash.After World war I ended, American resurrecters had a difficult time making profits. The farm depression of the 1920s was a contributing economic factor to the smashing Depression. Farmers were producing a surplusage and well over what American consumers were purchasing. Prices of agricultural products take flight about forty partage by 1921 and remained low for the rest of the ten dollar bill (Causes of the heavy(p) Depression). Some farmers were in so much deficit they couldnt even out pay off the mortgage on their farm and had to tear the land or even leave. Hard times had hit new(prenominal) major parts of the economy, as well, including energy, coal mining, railroads, shipbuilding, and textiles. Businesses had too much lineage and too few buyers.In addition, high tariffs and war debts were political causes of the big(p) Depression. America had lent gold to the United Kingdom and other European nations in World War I reparations. This cau sed many other economies to proceed reliant on the U.S. economy. As the United States experienced this economic downturn, many other nations were affected as America insisted on repayment. European countries couldnt afford to repay their debts. Tensions were further exacerbated when the Hawley-Smoot Tariff Act was passed in 1930. found on the ideals of protectionism, this act raised import duties to protect American farmers and businessmen, resulting in world trade decline by 66% from 1929 to 1934 and world-wide economic strain (5 Possible Causes of the Great Depression).The 1920s were a time of smashing economic and technological growth in America. World War I had just ended, and Americans were ready to take a break from the anxiety of world politics. During this time, known as the Roaring Twenties, Americans were focused on making money and having fun. Factories built to make weapons and ammunition for the war were reestablished to churn out consumer products. But, overproduc tion in industry resulted in an economic cause of the Great Depression. America was actually more productive than ever, but the gap between the full and the poor kept growing. Many manufacturers were turning huge profits, but almost of that was going to the management, not the workers. Too few workers could afford to buy what the factories were producing. Also, the surplus products could not be sold to foreign countries because of the high tariffs. Still, mint race to communicate their money on cars, radios, telephones and other new technologies.This uneven dispersal of income was one of the many economic causes of the Great Depression. The top one percent of the wealthy Americans owned over a third of all American assets (The Great Depression). Ninety- 9 percent of the population received a nine percent increase in their income, while the top one percent saw their income rise by seventy-five percent (5 Main Causes of the Great Depression).One of the major infamous events that led to the Great Depression was the Stock Market Crash of 1929. Without the cash to buy of those neat new gadgets same cars and radios, consumers relied on another new invention credit. Americans were saving little and disbursal money they didnt have. They were even borrowing money to invest in the stock market. Stock brokers readily agreed to sell shargons on margin, where they would loan citizens money to buy stock. The savings were not insured. Through speculation, these investors figured that the stock prices were bound to go up, allowing them to pay back the stocks veritable price ten-fold. This helped embellish stock prices well above what they were actually worth. On October 29, 1929, reality finally caught up to the stock market. Panic spread as the prices dropped. Investors began to sell stock, causing prices to drop. In response, brokers called back their loans. However, investors did not have full money to payoff the loans. Then, brokers demanded the sale of stock s to payoff the loans. This unending cycle caused warning device and money to vanish.Economies naturally go through terminations where there is more offer of products than demand. When that happens on a widespread level, there is a recession, a period where the economy shrinks. There atomic number 18 lots of possible reasons for why the 1929 deceleration turned into a full-fledged depression, which is a longer, more severe recession. When borrowers were futile to repay their loans, banks failed. In 1929, there were 25,568 banks in the United States by 1933, there were only 14,771. Personal and corporate savings dropped from $15.3 one thousand million in 1929 to $2.3 billion in 1933. (5 Possible Causes of the Great Depression). People everywhere started losing it. They rushed to topical anesthetic banks to withdraw their money while they still could. When that happened, banks across the country went under and had to close causing thousands of people to lose their life savings. As banks went bankrupt, some(prenominal) consumer spending and investment reduce into a downward spiral. Output fell while unemployment rose resulting in the negative multiplier effect ( economic science Essays Causes of Great Depression).Many historians also fault Herbert Hoover, the President in 1929, for making things even worse. He thought the key to ending the panic was balancing the political relations budget, so he raised taxes. That made consumers even less likely to spend, and businesses less likely to risk money on expansion. Finally, a 10-year drought hit the Great Plains in 1930, putting even more pressure on farmers. The Dust Bowl further exacerbated paradoxs caused by the Great Depression. Millions of acres of farmland were rendered useless and infertile. The drought added thousands of farmers to the already growing return of unemployed workers. Reaching its zenith in 1933, unemployment was twenty-five percent (Causes Of The Great Depression What Happened And Ho w It Compares With Today?).Although some facts are clear-cut, the exact causes of the Great Depression are still being debated. Some of the mainstream theories include the Monetarists view, Austrian view, Keynesian view, and bolshie view. Monetarists believe that the Great Depression was an ordinary recession, but that it degenerated into the Great Depression as a result of the policies implemented by monetary authorities, oddly the Federal Reserve. One of the major mistakes was that the Fed did not increase the make out of money to combat deflation. (What Happened During The Great Depression of 1929?). The Austrian view states that the unsustainable credit boom in the 1920s was the major cause. Particularly, the decision in inflate the U.S. economy to try and help the United Kingdom remain on the Gold standard rate was an indelible mistake (Economics Essays Causes of Great Depression). They show that the loss of trust in the banking system was the major harm. The Keynesian spec ulation claims that the problem was the lack of aggregate demand. Based on classical economics, this scheme believed that real output would naturally return to equilibrium. However, the Great Depression showed that this was not the case. Keynes argued that governments should intervene in the economy to stimulate demand and fix the problem (Economics Essays Causes of Great Depression). Lastly, the Marxist View saw the Great Depression as a symbol of the failure of capitalism. Contrary, economies with state-sponsored economic planning, such as the Soviet Union, were more successful as they overcame the Great Depression (Economics Essays Causes of Great Depression).To this day, economists are still debating the exact causes of the Great Depression. Contrary to popular belief, the Great Depression did not result directly from Stock Market Crash of 1929, but instead from political and economical causes that were building up months prior to the crash. Most historians agree that the Grea t Depression had devastating effects on the international economy. In order to prevent another catastrophic event from reoccurring, the government generally spends whenever the economy slows. It gives money back to Americans through tax cuts and monetary support. Additionally, the Federal Reserve lowers interest rates, making it cheaper for people to borrow money. When people and businesses can borrow money easily, theyre more likely to spend it and keep the economy humming along. This policy has kept recessions from turning into depressions ever since.Works Cited5 Main Causes of the Great Depression. 5 Main Causes of the Great Depression. N.p., n.d. Web. 5 Sept. 2014. .5 Possible Causes of the Great Depression. About. N.p., n.d. Web. 6 Sept. 2014. .Causes Of The Great Depression What Happened And How It Compares With Today?. The Great Depression. N.p., n.d. Web. 5 Sept. 2014. .Causes of the Great Depression. Causes of the Great Depression. N.p., n.d. Web. 6 Sept. 2014. .Economics Essays Causes of Great Depression. Economics Essays Causes of Great Depression. N.p., n.d. Web. 3 Sept. 2014. .The Great Depression. ushistory.org. Independence hall Association, n.d. Web. 5 Sept. 2014. .What Happened During The Great Depression of 1929?. About. N.p., n.d. Web. 7 Sept. 2014. .