great depression
One of the biggest economic disasters ever was the Great Depression. It began on "Black Thursday" a day that sent millions to the streets to live. The Great Depression was caused by many reasons; the three main ones were foreign politics, government policy, and maldistribution of wealth that the availability of credit made worse.Foreign politics was a big factor in the cause of the Great Depression. During the 1920's America was very prosperous because it sold over 10% of its goods to the European exports without buying any imports. Europe was borrowing money from United States so they could buy our goods. However, when World War I struck, European nations were taking all of the lent United States money and they were spending it on resources for the war. They purchased weapons, ammunition, and food. One encyclopedia even gives reference to the vulnerability of the banking system, "the banking system was not well prepared to absorb the shock of a major recession." (3, Wiki) They were working hard on rebuilding infrastructure and purchasing supplies that they couldn't pay back the United States.The European nations couldn't afford to pay the United States back and they didn't feel the need to. As one historian, Mr. John D. Hicks
When a huge windstorm came in it created the Dust Bowl. Another detriment of absence of government interference is that companies had the freedom to create monopolies; giving them the power to set whatever prices they wanted on products. Buying on margin means to ask for a loan of money to go and buy stocks hoping to make more money and pay back the loan with money left for your profit. In doing so, congress made sure that farming and its prices stayed at a constant so that it would encourage farmers to be productive. This caught on quickly with the general public and millions of people started trading stocks with dreams of luxury without working for it. "Farm prices fell by 53% from 1929 to 1932. " The greatest cause of the Great Depression however is credit and maldistribution of wealth and the effect of credit. This banning of alcohol during the 1920's was called prohibition. This is the belief of Social Darwinism, or that only the greatest businesses will survive. During the war, the government was pushing the farmers of America to modernize farming so that there would be more food for WWI. Banks closed, and people lost their homes and a quarter of the population had no jobs. The United States had entered the struggle late, and had poured forth no such contribution in lives and losses as the Allies' had made. The problem was that many people and banks that loaned the money didn't take proper precaution to assure that the borrower has sufficient collateral for the money being borrowed. The Great depression was caused mostly by fear for the general public, and also from the government failing in their duties to the citizens of the United States. Once congress enacted the 18th amendment, federal troops were on the loose trying to arrest and confiscate all alcohol that bootleggers possessed and wanted to sell.
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