How the Great Depression Changed American Economy
During the 1920s, America’s economy was extremely prosperous. Businesses were producing mass amounts of products, and because wages were high, consumers were buying them. However, the spending habits of the American people are what would lead to the economy’s downfall. People would invest most of their money in stocks, and spend the rest on items they didn’t really need. Not many people put too much of their income into savings, and those who did may have lost it anyways once the Great Depression started. The President during this time period was Calvin Coolidge. As shown in Document 1, Coolidge believed in a very “hands-off” policy when it came to government involvement in the economy. Coolidge’s administration sort of sat back and allowed the economy to prosper on its own. This did not help the country once the Great Depression hit.
There were several factors that led to the Great Depression. However, the main cause of the economy’s failure was the stock market crash of 1929. As seen on the graph in Document 2, once the stock market crashed, the unemployment rate skyrocketed. Banks and businesses went out of business, and millions of people lost their jobs. Before the crash, below 2 million people were unemployed. Four years later, in 1933, over 12 million were unemployed. Banks completely failed, losing all of their money. This meant that any money people had saved in the bank had vanished. The President at the time of the stock market crash was Herbert Hoover. Hoover was oblivious to the crash of the economy and did not know how to deal with it. His administration did little to help the economy or restore the country. In Document 3, you