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What caused the great depression?

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Nancy L. | Multiple subjects for K-College students: ELA, History,Sci.Spec.needsMultiple subjects for K-College students...
4.6 4.6 (21 lesson ratings) (21)

The socio-economic, labor, manufacturing, stock market and political environment was such in the late 1920's as to create "the perfect storm" for economic disaster in the US. Major causitive factors of the GD included over-production of goods, buying stocks "on margin," the new method of purchasing items on credit and lack of legislation in the banking industry. Much of the country's finances were based on credit investments in public companies whosel actual value was far below "listed" value, not unlike having to make inflated mortgage payments on a home that no longer could be sold for a price that offset its cost. As the stock market crashed in 1929, banks suddenly called in loans, foreclosed on properties, and people were laid off from companies that couldn't sell their products. Even people who had not made poor investments or bought on credit lost the savings they had kept in banks. The federal government did not have banking laws that insured a person's savings accounts (FDIC). There had also been a shift from farming to manufacturing, which altered the nature of the US economy as well as the buying practices of the everyday consumer. People were no longer as self-supporting as before WWI.  The ensuing "Dust Bowl" in the bread basket states which began circa 1933 exacerbated the devastated economy.  After President Roosevelt was elected, many  laws were enacted to provide federally subsidized jobs, welfare, social security, banking and stock market/securities reforms, and in 1938, the first national minimum wage requirement law.

If I had your assignment, I would include the foregoing, and then concentrate in one or two specific areas--perhaps, the advent of credit/installment plan buying in the '20s, or the effect of manufacturing/mass production on the middle class, stock market practices, the banking industry, etc. Also, you might ask relatives or older folks to share any recollections or stories they may have experienced or heard about to include in your paper. There are parallels to the current fiscal issues that the US is facing today, which makes the subject especially relevant...good luck, I hope that this will help you find your topic!

Michael S. | You can Master Science, Math, Economics, and LawYou can Master Science, Math, Economics,...
4.5 4.5 (11 lesson ratings) (11)
Look up Lawrence Reed's "Myth's of the Great Depression".  The depression was caused by numerous government actions and reactions that turned a recession into something far worse.  Protectionism, for example was put into place to "protect" American jobs but ended up costing far more in jobs as we were a major exporter.