For more information, please see the full notice. The Great Depression and U. As it lingered through the decade, it influenced U.
There are several explanations for what happened but the most obvious conclusion is that it was the confluence of several shortsighted and commiserating factors. Three main themes emerge: For the purposes of this discussion the focus will be on the United States.
Buying into the Boom The stock market crash marked the beginning of the Depression. Prior to the crash the stock market had been an important source of funding for industry; thus the crash itself was a contributing factor to the downturn as well as a harbinger of things to come. It was soon to become a symbol of runaway pessimism.
The freeing of capital from government use to commercial use following World War I caused commodity prices to inflate. This caused a recession and the stock market to fall. Once hard assets like commodities and real estate were no longer rising in price, money began to pour into stocks and bonds.
The Dow started climbing from its low at This depressed the value of the US Dollar and caused the already robust economy to boom. It was suddenly cheaper to borrow money to invest in the stock market called margin investing.
Since the Dow had risen steadily since"small investors leapt giddily into the stock market in large numbers". With artificially low interest rates and a booming economy people and companies were more apt than ever to invest in grandiose business expansions and over-priced stocks.
Mergers and acquisitions soared. InBritain ran into trouble with its gold standard again and Ben Strong lowered US interest rates in sympathy for a second time.
This ignited the boom into the speculative frenzy that brought the market to its peak on September 3, It was like pouring gasoline onto a fire - the flames rose up, no lasting fuel was added, but the economy sure looked great. Ben Strong died in October George Harrison, his successor immediately lobbied for higher interest rates to cool the speculative fervor.
The Dow peaked at The market and the economy had buoyed itself from one source of hope to the next for a whole decade. First it was the end of war-related inflation and booming exports for war reparations, next artificially low interest rates in and and booming exports due to a reduced value of the Dollar vs.
There were major tax reductions instituted by the Republicans under Hoover and finally in June of an international accord was struck with the Germans albeit short-lived over the financing of war reparations, a major issue of the decade. It fell 40 more points that day and another 30 on Tuesday Tragic Tuesday to reach a temporary bottom at The Great Depression was a period of unprecedented decline in economic activity.
It is generally agreed to have occurred between and Although parts of the economy had begun to recover by , high unemployment persisted . 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.
What combination of factors contributed most to the start of the Great Depression of the 's? Overproduction and the excessive use of credit. What conclusion can be drawn from the occurrence of the Red Scare and the decision of the Supreme Court in Schenck v.
President Herbert Hoover Herbert Hoover was the 31st US President who served in office from March 4, to March 4, One of the most important events during his presidency was the beginning of the period in US history known as the Great Depression.
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, are still with us today. 5 Causes of The Great Depression What caused the Great Depression, the worst economic depression in US history?
It was not just one factor, but instead a combination of domestic and worldwide conditions that led to the Great Depression. As such, there is no agreed upon list of all its causes.