How Did The Great Depression Affect The Economy
Tragedy in the world is a constant reoccurring phenomenon. We will have times of peace and we will have times of adversity, but that should never shake our nation. America was built upon a hollowed ground, step by step it was developed and built by our forefathers, and anything but excellence at this point is unacceptable. Many events have affected our nation, but none have ever shaken our economics greater than The Great Depression. The Great Depression was the longest and deepest economic downfall in the history of the industrialized world. The entirety of the whole incident rests upon the one major event; the stock market crash. Many factors led up to this crash, and in the long run it all came down to the fact that the banking system
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Many farmers had been growing food and crops for the government during the war. However, when the war was over the farmers continued growing enormous amounts of food. They even applied and received substantial loans from the banks to then purchase larger and more efficient farming tools, supplies, and machines. They used these to massify their farms and reach larger production quotas than ever. The output during the duration of the next year was quantifingly greater than any previous year. This in itself was not the issue; it was that people didn’t have money buy any of these goods. Part of this was caused from war bonds. War bonds are bond (loans) from the people to the government during a time of war that the government ensures to repay with interest. They all didn’t get paid back right away which also caused a multitude of concerns. Concluding that thought, people didn’t have very much money to spend on anything; including food to support their families. This is were it all begins tying together. The farmers had produced way to much food, and there was no demand for it. Therefore, all of the food began to be shipped away to silos and storage units to await demand. Unfortunately, the population still had no money …show more content…
Stocks were now available on margin. What this meant was you would purchase stock from a broker and then you would put down only 10% and then pay it back in full once you had enough money. The market kept rising and rising which made the stocks worth more and more which began to hurt some companies. This made many people hop out of the market and when this happened lots of the money was never repaid that had been loaned. This caused economic anarchy and many vast issues. Protective tariff’s were now also being integrated into the world trade systems. Foreign competition began to rise on goods so countries would raise the taxes so that the consumers would buy the home countries goods instead. However, in the long-run this drastically hurt those countries because when they had goods to sell those same countries turned around and did the same thing right back. Now the companies only had one country to sell to instead of the entire world. This made a very limiting potential rate. Long term, these caused companies to loose lots of money from over seas
Many farmers had been growing food and crops for the government during the war. However, when the war was over the farmers continued growing enormous amounts of food. They even applied and received substantial loans from the banks to then purchase larger and more efficient farming tools, supplies, and machines. They used these to massify their farms and reach larger production quotas than ever. The output during the duration of the next year was quantifingly greater than any previous year. This in itself was not the issue; it was that people didn’t have money buy any of these goods. Part of this was caused from war bonds. War bonds are bond (loans) from the people to the government during a time of war that the government ensures to repay with interest. They all didn’t get paid back right away which also caused a multitude of concerns. Concluding that thought, people didn’t have very much money to spend on anything; including food to support their families. This is were it all begins tying together. The farmers had produced way to much food, and there was no demand for it. Therefore, all of the food began to be shipped away to silos and storage units to await demand. Unfortunately, the population still had no money …show more content…
Stocks were now available on margin. What this meant was you would purchase stock from a broker and then you would put down only 10% and then pay it back in full once you had enough money. The market kept rising and rising which made the stocks worth more and more which began to hurt some companies. This made many people hop out of the market and when this happened lots of the money was never repaid that had been loaned. This caused economic anarchy and many vast issues. Protective tariff’s were now also being integrated into the world trade systems. Foreign competition began to rise on goods so countries would raise the taxes so that the consumers would buy the home countries goods instead. However, in the long-run this drastically hurt those countries because when they had goods to sell those same countries turned around and did the same thing right back. Now the companies only had one country to sell to instead of the entire world. This made a very limiting potential rate. Long term, these caused companies to loose lots of money from over seas