This report is about the economic hard time of the 1930’s. The great depression is a time when the people of the United States and the government's spending was out of control. You’ll learn that the great depression didn’t just happen over night but accumulated over a period of time.
It’s a common misconception that the stock market crash in October 1929 was called by the Great Depression. They are closely related but both are result of the modern economy. People were spending more money than they made. Banks played a role in the Great Depression because banks were willing to loan money to people who could not pay the loan back. ...view middle of the document...
At the same time the there was a tax cut to the rich but for lower income had no change and worker production was increased by 32 percent but workers wages only grew by 8 percents. Company profits grew by 65 percent in the same period of time and the government let the rich keep more of the profits. The Revenue Act of 1926 cut the taxes of people who made a million or more by two thirds.
As a result of the trend the top 0.1 percent of American family had a total income equal of that of the bottom 42 percent. This meant people were listen to advertiser and bought goods that the they did not have the money for. In the 1920’s the started a new innovation called credit also an attractive name for ”consumer debt”. This concept of buy now pay later just the delayed unforeseen truth that they still had to pay for the goods they purchased. People had so much debt that they could not by the product coming of the assembling lines.
American farmers who reprentsents one quarter of the American economy were already in a depression in the 1920’s, which made it difficult for farmers to participate in the “shopping spree” that the other Americans were doing. This was because the farmers had expanded there output during WWI when demand for farmed goods was high and Europe was cut sharply. Then after the war the farmers found themselves competing with the international markets. This then caused farmers to lower their prices and to sell the goods without profit.
Another factor was international problems weekend the economy because the US was the world’s chief creditor as European countries had a hard time paying back debt and reparations. Many American Bankers were not ready for this new role. Many of them lent heavily and a wisely to borrows in Europe. Germany was one of the biggest borrowers and had no way to pay these loans back. These huge debts made the international banking system unstable.
Also the US kept a high tax on import from other country, this inter made it difficult for countries to sell their good to the US which meant they were not making any money and that meant no money to pay off debt.
ECONOMIC COLLAPSE ( 1929-1933)