AP US History
March 22, 2013
What Caused the Great Depression?
America was very prosperous and the people reflected in high spirits and happy times. During the era of the “Roaring Twenties” America went through a Cultural Revolution. This cultural revolution lead us to a “Great Depression.” The great depression came about after the 1932 elections and is resulted by an unequal distribution of wealth, over production of goods, and an economic boom. Their were many different contradictions to what lead to the “Great Depression.”
During the era of the 1920’s the nations wealth grew by billions. However it was not distributed evenly. Wages of unskilled workers changed very little during the supposed prosperity of the 1920’s. Since the unskilled workers wages did not change they did not have any savings which resulted them to stop purchasing goods and lead to what we call the “business cycle.” Basically “the wealthiest 5% of the US population received about 33% of the nations personal income (Document 9). Since most of the wealth was concentrated amongst the wealthy the middle class and lower class were no longer able to afford any goods because of how low their income was. So not all goods were being purchased, and wages of these people during this time did not change.
In the 1920’s people also began to purchase goods on credit rather than cash because of their low wages causing increased production of goods by companies. Once people could no longer afford to buy more goods or need any more goods it lead to overproduction and under consumption. In the political cartoon “The Stumbling Block” explains how prices were dropping because of the over production of farming goods (Document 11). People also began to buy on installment (document 6). Based off this it would cause a rush to where high companies would produce a lot of products. Little did these business know that people would become “stuffed with stuff” which would only to conduct being left with to...
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