The Great Depression: The World's Worst Economic Slump
"There are nine of us in the family. My father is out of work for a couple of months and we haven't got a thing to eat in the house....I go to school each day. My other sister hain't got any shoes or clothes to go to school. My mother goes in her bare feet and she cries every night that we don't have any help." (Katz, 1978, p. 50)
Crash! The stock market crashes and the whole country runs crazy. The Great Depression is the worst economic period the United States has every faced. The unemployment rates were at their highest ever and tons of people lost their life savings. No one was expecting such a tragic event, but it was bound to happen. The point of this paper is to explore The Great Depression and show how the United States was in a period of poverty and unemployment.
Part One: Background Information
It is in the 1920's. It is a time of great mass culture, employment rates going up, and a time of prosperity. Especially since it was after the war, it was an economically and technological boom. New ideas are being brought up and people are doing more with their lives. Currently, Calvin Coolidge is the President and Herbert Hoover will soon take his place. Most people in the country are happy. (McElvaine, 1993, p. 13)
However, all the good things from the "Coolidge Prosperity" were not shared equally among all Americans. According to a study done by the Brookings Institute, in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%. The top percent controlled most of the savings and 80% of the population did not even have a savings. (McElvaine, 1993, p. 37)
Basically, too much money was given out in the 1920's. About 24,000 families had a combined income as large as that shared by over 11.5 million poorer families. 71% of all American families had incomes lower than $2500 a year. The 24,000 richest families made $100,000. Some families had even over $1 million. This maldistribution of wealth was a major cause of the depression. (McElvaine, 1993, p.38). According to one politician,
"Income was being distributed with increasing inequality, particularly in the later years of the period." (McElvaine, 1993, p. 38)
There is something called the law of supply and demand. The price of a product or service is related to how much of it there is. The higher the supply of something, the lower its price. If supply goes down, compared to how many people want it, the price could go up. If supply stays the same, but more people want it, the price could also go up. This is what made prices go up in the 1920's.
(Rensberger, 1996, p. 26)
During the 1920's there was a lot of increased manufacturing. Large numbers of new appliances and items such as radios, automobiles, and items like refrigerators were sold. Eventually, too many of these items were produced. More of them were being produced than people bought. People never saw a depression coming on. (McElvaine, 1993, p.39)
The gap between the rich and the working-class was still growing and was largely due to mass manufacturing. Workers made a lot more products in a lesser period of time. However, the workers only got paid a little more. Wages went up only one forth as fast as productivity increased. When production costs fell sharply, wages still went slowly up, and the prices stayed the same, the benefit of increased productivity went into corporate profits. Businesses made a lot more money. On top of that, Coolidge also lowered taxes, which made the gap even larger.
(McElvaine, 1993, p.39) Coolidge's point of view on business was as follows:
"The great wealth created by our enterprise and industry, and saved by our economy, has had the widest distribution among our own people, and has gone out in a steady stream to serve the charity and business of the world. The requirements of existence have passed beyond the standard of necessity into the region of luxury....The country...
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