Causes Of The Great Depression

Causes of the Great Depression

Many people think that the Great Depression was caused solely by the stock market crash. Anybody who tells you this probably didn’t pass U.S. History in high school. The fact is, the Great Depression was caused many different factors. Four of which were overproduction, uneven distribution of wealth, protective tariffs, and the four “sick industries” of the 1920’s.
After World War I, new technological improvements helped factories to produce higher quantities of goods using smaller amounts of employees. Fewer workers meant less money being redistributed to the consumers to purchase products. America didn’t have a necessity for this higher quantity of goods with less people receiving paychecks. Thusly, the age-old system of supply and demand began to wither because there were too many products with too few people who could afford them.
In 1922, the average weekly earning for most people was about 22 dollars. Because of this uneven distribution of income, families couldn’t afford to buy most products. Businesses suffered additionally because they had trouble selling goods. Most profits that could have been put into employee’s salaries went to shareholders or back to the business itself. If the workers had higher wages, they would be able to purchase goods and thus help the economy.
In 1930, congress passed the Hawley-Smoot Tariff Act, which created the highest protective tariff in United States history. This made foreign nations incapable of selling their products in America. In reaction to this, other nations stopped buying American-made goods and the United States’ economy floundered because of this.
During the 1920’s, four of America’s leading industries began to struggle. First, railroads had difficulties because of the growing competition from cars, trucks, and busses. Second, textiles floundered because of the foreign competition from India, China, Japan, and Latin America. Furthermore, the revolutionary transformation in women clothing reduced the amount of material needed and thus lowered the demand for cloth. Third, the coal mining industry struggled because of competition from cheaper, more widely available resources such as natural gas, oil, and hydroelectric power. Fourth, America’s agriculture industry staggered chiefly from overproduction. Many farmers borrowed money to expand their operations and couldn’t pay back their loans because the prices of crops dropped about 50 percent due to foreign agricultural competition.
In conclusion, the Great Depression can’t be attributed to just one cause. However, among overproduction; uneven distribution of wealth; protective tariffs; and the struggling of America’s leading industries, the largest contributor to causing the depression, in my opinion, was the unequal distribution of income. I believe this because if congress attempted to redistribute money to the consumers, people would have been able to purchase more products, giving the money back to businesses and keeping the cash flowing.

Category: History