Great Depression

Topics: Great Depression, Wall Street Crash of 1929, Herbert Hoover Pages: 3 (949 words) Published: October 26, 2014
America went through hard times before like bank panics and depression in the early 1820s, 1830s, the mid-1870s, and the early and mid-1890s. But never it never suffered an economic illness so deep and so long as the Great Depression of the 1930s. The stock market crash, farm failures and bank failures caused people to go into a hard crisis of poverty causing the Great Depression. In order to solve this depression the President Hoover issued policies that would impact or change the course of the american economy. Some of those policies are the Boulder Dam, and the Reconstruction Finance Corporation. The stock market has soared throughout most of the 1920s, and the more it grew, the more people were eager to pour money into it. Many people bought "on margin," which meant they paid only part of a stock's worth when they bought it, and the rest when they sold it. That worked fine as long as stock prices kept going up. But when the market crashed in late October 1929, they were forced to pay up on stocks that were no longer worth anything. Many more had borrowed money from banks to buy stock, and when the stock market went up, they couldn't repay their loans and the banks were left holding the empty bag. Many small banks, particularly in rural areas, had overextended credit to farmers who, for the most part, had not shared in the prosperity of the 1920s and often could not repay the loans. Big banks, meanwhile, had foolishly made huge loans to foreign countries. So the foreign countries could repay their earlier debts from World War I. When times got tough and the U.S. banks stopped lending, European nations simply defaulted on their outstanding loans. The result of all this was that many banks went bankrupt. Others were forced out of business when depositors panicked and withdrew their money. The closings and panics almost completely shut down the country's banking system. While the overall economy had soared in the 1920s, most of the wealth was enjoyed by...
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