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The Great Depression

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The Great Depression was a huge economic downfall in North America and involved many other industrialized countries of the world. The Depression began in 1929 and lasted for about ten years. Millions of people lost their jobs along with many businesses going bankrupt. The common misconception of the Great Depression is people think that the stock market crash was the main cause for it. There were many causes for the Depression; unequal distribution of money during the 1920's was the main cause of the Depression. This unequal distribution happened on many different classes of people. The imbalance of money is what created such an unstable economy. The stock market was doing much worse than people thought during this period. This lead to the biggest stock market crash in our history. The misdistribution of wealth and the stock market crash caused the economy to plummet (Modern).

The stock market was bigger than ever in the 1920's. Prices reached levels that people never dreamed of. At one point when the market was roaring in September 1929 forty percent of stock market values were pure air. This meant that investors thought that the stock market would go up because it had been going up. By 1928 and 1929 the Federal Reserve was worried about the high level that the stock market had reached (Galbraith 116). The Federal Reserve feared that the stock market might burst suddenly. If this did happen investment might fall, parts of the stock market might not be able to pay back debts, and even worse recession might result (Galbraith 118). The Federal Reserve in 1928 tried to make borrowing money for stock speculation more difficult and very costly by raising interest rates. All of the options that the Reserve tried had unfavorable risks associated with them. Many economists believed that the Federal Reserve was responsible for the recession. The stock market did crash on October 29 1929. The Federal Reserve tried to do to much to stop the recession and in return brought on the recession that they were trying to stop (America).

When the stock market crashed in October this day was known as "Black Tuesday." On this day Americans saw their stocks lose a tenth of their value. The exact reason for why the stock market busted on this day are unknown (Delong 1). The stock market crash of 1929 greatly added to the uncertainty in the economy. No one knew what was going to happen next with the economy. Firms cut back on purchases of produce goods and the consumers cut back on the purchases of consumer goods (Galbraith 117). This uncertainty mixed with the stock market crash created the biggest recession America has ever seen.

By 1933 millions of Americans were out of work. Bread lines were a common sight in most cities. Hundreds of thousands of people scoured the country in search of food, work, or a roof. There was a popular song from this era known as "Brother, can you spare a dime (Modern)?" A big step that happened for the unemployed were the Civilian Conservation Corps, a government program that brought relief to men between the ages of 18 and 25. The Conservation Corps gave jobs to young men in work camps across the country for about $30 per month. There were about 2 million men that took advantage of these jobs (The Great Depression). These men took part in a variety a jobs that included: planting trees, elimination stream pollution, creating game and bird sanctuaries, and conserving natural gases. For the other part of society work relief came in the form of the Civil Works Administration. These jobs consisted of ditch digging to highway repairs to teaching. Civil Works Administration was created in November 1933 and was ceased in the spring of 1934. Roosevelt continued to offer unemployment programs that offered pay (America).

The average farm income in 1930 was the lowest it had been since 1921. Many farmers could not afford to pay their mortgages and lost their land. Five percent of the nation's farms underwent mortgage foreclosures in 1933 (The Great Depression). The situation was the worst in the area known as the "Dust Bowl." This was an area of about 150,000 square miles in the Midwest. A result of the extreme farming before the 1920's this region suffered from enormous soil erosion and dust storms which made it impossible to continue farming there through the 1930's. Many of the farmers moved west to find new land and in most cases they became temporary workers or sharecroppers (Galbraith 120). Doing this helped the farm economy in a few ways by reducing production, but brought hardship to the people of the fertile Dust Bowl. The recession drastically reduced the number of goods and services bought and sold. The financial centers suffered from a huge number of business failures. Business failure came to a peak in 1932 when over 30,000 failures happened nationwide (Modern). Banks closed their doors because of a lack of liquidity. There were almost 2,500 banks that suspended operations in 1931. Production decreases as a result of falling investment and an inability to pay workers (America).

The presidential campaign of 1932 was mostly a debate over the causes and possible solutions of the Depression. Herbert Hoover was the unlucky man entering the presidency only eight months before the stock market crash. Hoover tried his hardest but was ineffective in getting the industry going again (America). Herbert Hoover's Democratic opposition, Franklin D. Roosevelt said that the Great Depression came from the economy's flaws. This had started from the Republican doings during the 1920s. Mr. Roosevelt was prepared to use the government's power to solve the Depression problem. The presidential election resulted in a Roosevelt sweep who won the election by over 7 million votes (Delong 1).

In 1933 the newly appointed President Franklin D. Roosevelt brought a sense of confidence and optimism that immediately gave hope to the people. Roosevelt had many new programs including his famous New Deal. "The only thing we have to fear is fear itself," which was said in his inaugural address to the nation (The Great Depression). The New Deal was taken from the Europeans which introduced many social and economic reforms that had been going on over there for ore than 50 years. The New Deal in America was remarkable because of how fast it took to go into affect. Which took 50 years in Europe seemed to only take a few years in America. There was never any speculation or criticism over the New Deal; in fact many thought the New Deal gave individuals a boost of interest in the United States government (Modern).

When Roosevelt first came into office the banking system of the United States was doing horrible. Banking took such a steep downfall that many people believed that banking would



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