The Great Depression - Assignment Example

The great depression Factors contributed to causing the Great Depression The stock market crash of 1929 There was speculation in the stock market which was not regulated at that time. This made many Americans purchase stocks on credit a situation known as margin buying. The stock market crashed as a result of a decline in prices which slapped investors with a cold wake up call. The stock market crash was the beginning of the Great Depression. The stock market crash made people increase their liquidity preference which in turn made them to hoard money.2. IndustrializationThere was increased agricultural and manufacturing output, but the wages were not in pace for all consumers to purchase the produced goods.

This led to an increase in inventories while agricultural income remained relatively low. 3. Lack of economic understanding by the Federal ReserveFederal regulations on the US businesses contributed to the Great Depression. This is especially because taxes laws were made favorable to large corporations. Macroeconomic policies never existed, and there was the absence of fiscal and monetary policies. Laissez-faire and hands off government were the watchwords used by the leaders. What cured the Great Depression?

The Great Depression ended when the Federal Government of the United States imposed rationing, recruited around 6 million defense workers who included African Americans and women, ran massive deficits in order to fight World War II and drafted 6 million soldiers. Deficit spending, inflating the supply of money and the new deal of the federal government also cured the Great Depression. World War II also cured the Great Depression. The Great Depression ended in December 1941 at the same time when the World War II began.

The economy had been expanding since 1938, just less than three years before the country’s entry into the Second World War and the economy stopped expanding in 1945 before the war ended. During the war, the economy of US was a huge arsenal which led to the deterioration of the consumers well being. However, after the war, a genuine prosperity returned in the economy for the first time since 1929 making the war a cure of the Great Depression. How the Great Depression affected Hebert HooverHebert Hoover was blamed for the Great Depression as he was not involved in the stock market issue.

The depression affected him so much that he had to give much that he had to pull out his money from the stock market. He did not give government aids to the people for fear of inflating the budget of the Federal government and was forced to break off from the laissez-faire policy which was used to deal with depressions and recessions in the country. He was forced to spend more of the country’s income to help in economy rebound like the construction of the Hoover Dam which created an agency to help railroads, banks and other important businesses to stay put in business hence helping the economy.

Study questions1. What legislation was put into place to prevent another Great Depression?2. What ended the Great Depression?3. Why were people heavily investing in the stock market during the late 1920s despite a weak American economy?4. How have the attitudes of the Federal Reserve Board, President and our government in general, changed towards the stock market and American economy? Do they still maintain a laissez-faire view?Work CitedTemin, Peter. Did Monetary Forces Cause the Great Depression?

(New York: W.W. Norton & Company, 1976Galbraith, John Kenneth. The Great Crash 1929 (Boston: Houghton Mifflin Company, 1988