Great Depression

American_union_bank

Dear 5th graders,

Many people think that the Great Depression was caused by the Stock Market Crash but that is just a beginning.  The Stock Market Crash occurred on Black Tuesday October 29, 1929.  An actual cause of the Great Depression was the bank failures.  Stock is owning part of a company and making a profit off of how well they are doing.

During this period of time 9,000 banks failed.  As the banks failed the deposits were not guaranteed so the people just lost their savings.  The deposits was money put in by a citizen.  The remaining banks without problems were unsure about there status so they stopped being as willing to create new loans.  Loans were money given from the bank to the people so they could make purchases.  Another cause for the depression was people were purchasing less.  This led to less production of items and this lessened the amount of people in the workforce.

Unemployment rate rose above 25% which meant, of course, even less spending to help lighten the economic situation.  Another one of the causes was the American Economic Policy with Europe.  Businesses were beginning to fail and the government created the Smoot-Hawley Tariff to help protect American companies.  This tariff led to a high tax on goods coming to the USA from Europe.  Another thing that helped with the bank failures was too much use of credit.  They kept putting payments on their card and they did not have the actual money to pay.

The Midwest was unable to produce food due to the lack of rainfall in the Mississippi Valley.  When America is doing poorly most countries are also doing poorly because of how much American means to them.  It took to long for us to get out of the depression because the people were unable to learn this.  I hope you are now more informed about the Great Depression.

picture

Sincerely,

Kevin Hood