Imagine it is the year 1933 and you are an American citizen in the United States. Your country takes a dark turn when all of a sudden you are out of a job, the bank has shut down, and the stock market has crashed. The United States is now going through an economic crisis that has the country in chaos. Luckily this tragic story has a pleasant ending. Franklin D. Roosevelt takes on the daring task of becoming the next president, while ultimately saving the country from economic destruction.
An ignorant or uninformed person may hear the words “great” and “depression” in the same sentence and observe it as some type of irony or paradox. Although the words are controversial to each other it has a deeper stronger rooted meaning in the United States. The Great Depression was a worldwide financial crisis throughout the years of 1929 until 1939. It was the worst economic downfall in history. There was not a single event that could point to the cause of the Great Depression, rather there were many elements that made up this crisis.
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The Wall Street Crash, also known as “Black Tuesday” took place on October 24th, 1929. It lasted several days and the market began to decline. Citizens began to panic and stockholders lost billions of dollars due to the sudden drop in the financial market. Employees abundantly went throughout the streets of New York City following this fatal decline. The stock market crashing only became a ripple effect in this crisis. Banks started to collapse across the country leaving people neglected financially. There was no financial insurance at this time so many Americans lost all of their money. Out of panic, many people withdrew money forcing banks to close. Organizations that had once lent money were unwilling to loan people money because of their financial worries. Ultimately, this all managed to encourage less purchasing among the people. There was no money to borrowed, returned, or loaned.
Investments were obsolete, savings were destroyed, and credit was almost fictional business and companies came to a halt. Accordingly, thousands of workers were relieved of their responsibilities and people could not pay off items or things they once had bought. According to Kimberly Amadeo, “The highest rate of U.S unemployment was 24.9% in 1933, during the Great Depression”. This made the current economic situation even worse which compelled the government to intervene. In June 1930, the 31st president of the United States, Hebert Hoover with the help of Congress decided to pass the Tariff Act. The act elevated the price of taxes on imports from other countries. This action was supposed to support farmers and the nation’s economy in that time of crisis, but that was unfortunately contradictory because stocks inevitably dropped.
As a result, countries raised taxes on American goods, which created a decline in world trade.
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Key Elements of the Financial Crisis in the Great Depression.
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2022 Aug 25 [cited 2024 Nov 2].
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