In the 1920s, new manufacturing methods and industries made the American economy grow because it was able to produce more commodities and equipment. Many citizens have increased profits, especially in the stock market.
However, this period lasted only 8 years and in the ninth year, the economy began to decline, and this led to panic among the citizens. Therefore, the great depression was widespread and for this reason, great prosperity was followed by the great depression. This paper sheds light on the causes that led to the great depression in America
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According to Bordo and White, the Great Depression started in 1929 and many people suffered because all their businesses failed in many areas, including agriculture and the banking system (45). This has resulted in many people losing their jobs, especially the miners; therefore, it is reduced to purchase.
Apart from the fact that farmers produce many farm goods and products, demand is very low. Those farm workers lost their jobs because the prices of farm produce were too low and the big farmer had no money to pay the workers. Black workers were the worst affected as they were retrenched to make way for whites. Employees could not afford to buy manufactured goods, from textiles or other industries because their income had dropped.
Parker confirms that because of all the problems it was not easy to distribute money and the unemployed people did not move from one place to another across the country in search of greener pastures (104). Most of them followed the railway line while boarding trains in hopes of finding work in other cities. While moving from one village to another, some chose to live in small towns with cardboard and wood-paneled houses.
While companies continued to lay off workers, many problems arose because those who paid for their goods by renting could not complete their payments and that is why the sellers took them for themselves. People are misled by economic prosperity, which existed in the early 1920s, and that’s why they buy things on credit and rent to buy to pay for a period of one year or more depending on their salaries.
Thomas and Fergusson point out that one of the biggest causes of depression is Stock Market Crash (23). In June and August 1929, stock market levels rose and reached an all-time high. Many economists like Irving are impressed by stock prices.
However, after the rise, it began to decline slightly but eventually declined sharply and this occurred in the months of October and September, but the largest decline occurred on one Thursday, which the United States called Black Thursday.
People were selling their shares and a large crowd gathered on the Stock exchange Wall Street. This led to some suicide. Some bankers are still optimistic, they are investing heavily in the stock market, and people are buying stocks.
Shortly after that, shareholders lost their investment, the loss was estimated at more than $ 40 billion. Some banks have closed since their investment was dependent on citizens and this was caused by the accident.
Ivan explains that bank closures are also a source of frustration because when people see that other banks are closed, they rush to withdraw their money from the few that were open, and this led to the continued closure of many banks and those he did not withdraw before closing down (26). Since people did not guarantee their bank accounts, many of them lost their money.
The few that remained stopped lending to banks and this made the situation worse as there were fewer costs. Banks are also facing increasing debt because people are failing to repay it.
In conclusion, all these events led to depression throughout America with some people committing suicide and others moving from one country to another without knowing where they were being held. Many families split up, as well as divorce between married people.
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