Great Depression – Alex Taylor

Greetings Children,

The Great Depression was one of most difficult hardships our country had to overcome. Many people were devastated  by the effects of this time period. Businesses, Farms, and people’s lifestyles were destroyed; however The Great Depression did not come out of nowhere. Five main reasons caused all the turmoil.

In the 1930s many people began to use credit as a source of money. Since many new inventions and products were produced during this time period, everybody had to have the next big thing. Unfortunately, most people did not have the money upfront to buy these products so they had to charge them to their credit cards. Overtime the people were supposed to pay off the money they spent, but they couldn’t. Overtime debt continued to increase, which caused a huge problem for our nation.

Next many industries were already in decline. The major companies such as the automobile industry were not selling as many products as they were in the 20s. More goods were being produced than being consumed. The wages of employees began to drop off so they began to slack in their industry. Lots of  money was unnecessarily wasted.

Also the 1930s sparked a growing gap between the rich and the poor. Business profits rose, but it didn’t trickle down to the workers. One off the major problems was that 59% of the country’s wealth lied in 1% of the people’s hands. Many jobs became mechanized which resulted in people losing jobs.

The banking industry began to take a major hit in the late 20s. They began to lose deposits and there was an increase in defaults or loans. Also unemployment caused defaults on mortgages. Taxes were cut on the wealthy class so less was coming in to the government. More factories began to use machines which caused more unemployment among the people.

Finally the United States saw a severe decline in foreign trade. Since so much money was being lost the US could not import from other countries. They tried to put extremely high tariffs on their exports, but it wasn’t very successful. After World War I, the US provided a lot of money to the countries who were completely devastated by the war.

Money began to become more scarce. This resulted inflation and initiated the struggle of the 1930s.

Sincerely,

Alex Taylor

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