In the commencing essay, I will be evaluating whether the Wall street crash caused the Great Depression or not. I will be discussing whether is has played a major part in the Great Depression, whether it was just a minor incident.
The Wall Street Crash was a defining moment in the American economic history. It occurred on October 29, 1929. Before this, the American economy was booming. During the 1920’s, share prices were rapidly increasing and businesses were doing very well. The image the world received from America was that that everyone was rich, which wasn’t. The farmers were given very small amounts of money for their work. This meant that people had more money so more products were being sold. There was a lot of speculation that share prices would continue to rise. However, in 1929, the stock markets began to fall dramatically and caused devastating effects on the American economy. This was the beginning of long-lasting consequences for the whole country, and the world. The Great Depression was a long gradual period in which America suffered great economic depression, during which financial activity slowed down and unemployment was high. America had a high rate of starvation, homelessness and poverty. People were living in poor conditions with very little money.
There were a few causes of the Wall street crash.
One was overproduction. Throughout the 1920’s there was a man known as Henry Ford began to produce cars at an extremely rapid rate. The amount of goods produced by the industry was increasing especially these auto mobiles,l and consumer goods. However, this was stopped from the 1930’s. As a result of overproduction, there was not enough wealth for people to keep on buying.
The second cause was the weakness in banks. At the start of 1920, there were 30,000 independent banks. Most of these were small banks, in rural areas. They were liable to being withdrawn loans by their customers in large amounts. 10 years later, 5000 banks were gone, which was 1/6th of the country’s banks.
Another main reason was the extremely uneven distributions in income. In 1929, a staggering 1/3 of the country’s wealth belonged to just 5% of the population. Meaning that just 2/3 belonged to 95%. This was a factor of overproduction as limited amount of people in the country could afford new products.
Probably the main reason why the Wall Street Crash happened was that there was an international problem with the economy. The ability of the European country’s being able to sell goods to America and helping them out with debts, was limited by a Tariff policy which was introduced. This policy (Smoot-Hawley Tariff) was increasing the tax on imports. As a result they were not helped and assured by European countries with trades.
This Wall Street Crash impacted many things. As well as the economic downfall, it also caused banks to come to bankruptcy. People borrowed money from the banks, and when the Wall Street crash happened, they were unable to pay the banks back. More than $8.5 billion was loaned out, which is even more than the entire American economy. This great crash also affected the everyday lives of the American citizens. Over 20 million American citizens lived on $2000 per year. People lost their jobs because the business they worked for couldn’t afford their wages. So people began to work in the agriculture. Also, all businesses were struggling to survive in this crash. Share prices increased rapidly, and the businesses were unable to pay for their stock. This was a cycle which inflicted on each other, and each one started from the other.
The Wall street Crash itself was not the sole reason of the Great Depression. There was very severe drought in the 1930 in the USA, which impacted America even more. If the farmers were unable to grow crops, how would they receive money, and feed their families? If the businesses do not receive the crops, how would they be able to keep receiving profits? As a result, these farmers had to sell their land. This was when famous author John Steinbeck wrote the book ‘The Grapes of Wrath’, which was based on this drought. Also, the Smoot-Hawley Tariff as mentioned above, was a vital part in this depression, as trades were limited.
In conclusion about whether the Wall Street Crash caused the Great Depression, personally I believe that the Wall Street Crash was not the sole reason for the Great Depression, but was definitely the main reason. If there was no economic downfall, the Great Depression would not have happened. The Wall street crash opened doors for many different problems, such as bankruptcy. If the Wall street crash itself did not happen, these things would not have occurred.
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