The crash of the New York Stock Exchange on October 29, 1929, signaled the start of the Great Depression, the worst economic crisis in U.S. history. This period would last until 1941, when the United States began preparations to enter World War II. When the stock market began to spiral downward, many looked on in disbelief. However, others recognized that the plummeting prices were a confirmation of severe economic problems long in the making. For much of the 1920s the United States seemed prosperous. Many Americans were employed, and goods such as automobiles, appliances, and furniture flowed out of factories. Yet an undercurrent of unhealthy factors ran through the American economy factors that all came together and surfaced in late 1929.
During the 1920s there was no national economic planning or any significant watchdog agency to monitor the U.S. economy. The Republican administrations of Presidents Warren G. Harding , Calvin Coolidge, and Herbert Hoover followed a laissez-faire approach. Laissez-faire refers to the deliberate absence of government regulation. None of these presidents attempted to regulate the buying or selling of stocks and bonds; they exercised no controls over banking, manufacturing, or agricultural production. Likewise, no attempt was made to gather or analyze statistics that would have pointed to increasing problems in stock investing and overproduction of agricultural products and consumer goods. This approach to government was a major contributing factor in the Great Depression.
Another general factor that contributed to the Depression was the "get rich quick" mentality that developed during the 1920's. Many Americans believed their fortune was just around the corner. This belief was fueled by the mass production of consumer goods, mass advertising in magazines and newspapers, and exotic silent movies telling tales of riches and success. With this "get rich quick" attitude, many Americans began to recklessly spend what little money they had. Hoping to look like glamorous movie stars, they bought a vast array of beauty products. On a larger scale many Americans purchased, sight unseen, parcels of land in Florida and southern California. When some investors went to visit the lots that had been purchased, they found swamps or desert. Realizing they had made a poor investment, many turned to the roaring stock market to overcome their losses. Focused on their own individual situations, these people did not recognize that their actions would soon combine with a number of other factors to produce the Great Depression.
Sources:
http://ic.galegroup.com/ic/uhic/ReferenceDetailsPage/ReferenceDetailsWindow?
http://www.investopedia.com/articles/economics/08/cause-of-great-depression.asp
Do you think that without the conservative laissez faire presidents caused the depression? Would a president who proposed mroe regulation possibly stop or lessen the depression? I find it interesting that only after the depression and after the crisis happens does our country create regulations to stop a crisis.
ReplyDelete"Another general factor that contributed to the Depression was the "get rich quick" mentality that developed during the 1920's. Many Americans believed their fortune was just around the corner. This belief was fueled by the mass production of consumer goods, mass advertising in magazines and newspapers, and exotic silent movies telling tales of riches and success. " I didn't think about this point being as being a factor that contributed to the Great Depression, it is interesting to see how this mentality that people had contributed to the decisions that people made.
ReplyDeleteI know that the stock market crash is seen as the major reason that the great depression occurred, but some sources argue that the nation had already started to move towards the great depression before the stock market crash of 1929 occurred
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