The Causes of the Great Depression
Causes of the Great Depression
Meghan Driscoll Period 7
10/29/12
Many economists believe that our economy works in ten year cycles where there are highs and lows. After the period of economic prosperity in the twenties, it was probable that the stock market would go through a period of self-correction. However, a multitude of events, both domestically and internationally, Washington policies and enactments, and natural disasters, led our country into the worst economic depression in its history. The depression was characterized by a deflation of assets, a drop in demand, high unemployment, extreme poverty, and a total lack of optimism. After World War I, the United States saw a period of great economic boom, while Europe was still struggling. They had been devastated by the war while America was largely left untouched. During the roaring twenties, companies anticipated continued growth and earnings, and businesses were expanding as a result of record profits. Many sales were on installment plans, as the middle class added to their debt. Americans wanted two-car garages, motor cars, bathtubs, and other luxuries. It was easy to say that "in every town in America, the Babbitts were keeping up with the Joneses" (Nardo, 10). During World War I, the government encouraged people to buy Liberty Bonds to come to the aid of the country. Doing this was both patriotic and financially rewarding. People also found that such paper investments were neither complicated nor risky; therefore, they felt more comfortable investing in Wall Street. More Americans invested in the stock market driving up the cost of shares. Not just the Wall Street businessman, but the laborer, secretary, and taxi driver emptied their savings and mortgaged their properties to make the fast money that the stock market was offering. There were stories of working people who had bought stock, sold it, and made more from it than in their entire life.
Meghan Driscoll Period 7
10/29/12
Many economists believe that our economy works in ten year cycles where there are highs and lows. After the period of economic prosperity in the twenties, it was probable that the stock market would go through a period of self-correction. However, a multitude of events, both domestically and internationally, Washington policies and enactments, and natural disasters, led our country into the worst economic depression in its history. The depression was characterized by a deflation of assets, a drop in demand, high unemployment, extreme poverty, and a total lack of optimism. After World War I, the United States saw a period of great economic boom, while Europe was still struggling. They had been devastated by the war while America was largely left untouched. During the roaring twenties, companies anticipated continued growth and earnings, and businesses were expanding as a result of record profits. Many sales were on installment plans, as the middle class added to their debt. Americans wanted two-car garages, motor cars, bathtubs, and other luxuries. It was easy to say that "in every town in America, the Babbitts were keeping up with the Joneses" (Nardo, 10). During World War I, the government encouraged people to buy Liberty Bonds to come to the aid of the country. Doing this was both patriotic and financially rewarding. People also found that such paper investments were neither complicated nor risky; therefore, they felt more comfortable investing in Wall Street. More Americans invested in the stock market driving up the cost of shares. Not just the Wall Street businessman, but the laborer, secretary, and taxi driver emptied their savings and mortgaged their properties to make the fast money that the stock market was offering. There were stories of working people who had bought stock, sold it, and made more from it than in their entire life.