• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Evaluate the view that overproduction of goods was the most important reason for the collapse in US economy from October 1929

Extracts from this document...


Evaluate the view that overproduction of goods was the most important reason for the collapse in US economy from October 1929 On October 24th 1929 the share stock exchanged fell and the American economy faced its most serious economic obstacle. The traditional view of the event is that the Wall Street Crash caused the depression, however there are other interpretations which suggest otherwise. There is evidence which proves that the economy started to crumble much earlier than October 1929. America had other serious social and economic problems which were responsible for the collapse. The period of 1920s was well known for its rapid boom in the economy and in industry, which caused a change in the American life style. However, closer analysis of the decade reveals many difficulties, which America failed to solve. The overproduction of goods in the country was very significant as it was linked with other problems, however it was directly dependant on other factors, such as the set up of the banking system and the widely available buying on credit, which both largely contributed to the crash in 1929. There are other schools of thoughts which suggest that it was the widely popular speculation on the market which was responsible. ...read more.


.Economic historians, like JK Galbraith, support this view and argue that the republicans were mishandling the economy. The government allowed banks too much freedom and had no real way of controlling the transactions that took place. As a result the authorities had a limited idea of what was happening in the economy. The government also took some fatal steps, like introducing the Daws plan in 1924and Young plan 1929 which reduced the amount of reparations that Germany had to pay back. As result less money was being pumped back to America. Lack of effective government actions is the most significant reason for the collapse of the economy, because it failed to solve many problems and caused new ones, which also had damaging effects on the economy. The set up of the backing system and the new availability of loans fueled the increase of the value of the stock market, but at the same time also contributed to its collapse. Although the government was partially responsible for regulating the system, a Federal Reserve board was set up which was to ensure efficient control of the transactions. The setup of the banking finances was flawed. The federal banks were joined together and prepared to support each other in a crisis; however the smaller state banks, used by the majority of the population, did not co-operate. ...read more.


Hoover failed to effectively address the question of overproduction. Therefore, Hoover's actions had two different sides to them, they were intending to help but at the same time were an important reason for the collapse of the economy in 1929. Overall, historical evidence presents us with various reasons for the crash in October. Although some historians agree that overproduction was an important reason for the collapse of the economy, it was the lack of effective governmental control which was more crucial. Even though, overproduction was a serious problem, it was dependent on other factors, hence making it less important. As argued by Tindal and Shi, as well as JK Galbraith government misguided the population about the state of the economy and allowed banks too much freedom, which led to to other problems. Had the government introduced more regulations for the banking system, the rapid raise of use of the hire-purchase scheme would not have been possible, and overproduction would not have been encouraged so extensively. In addition, if less credit, allowed by government, was offered by the banks, less people would have bought on the margin and the value of the economy would have been more accurate. This demonstrates that although numerous aspects contributed to collapse of the economy, the involvement of government, or perhaps the lack of it, was at the centre of it all, making it the most important reason. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level History of the USA, 1840-1968 section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level History of the USA, 1840-1968 essays

  1. a) "How far do these sources support the view expressed in source one that, ...

    castles to maintain his control of the country; and it allowed him to firmly set, in the minds of the Saxons, that the Normans weren't just invaders, like the Vikings, but conquerors of England. However, the revolts were not the only reason for William's successful affirmation of royal authority on the country.

  2. How far do you agree with the view that the Wall Street crash was ...

    quick" scheme as once shares would increase they would immediately be sold in order to make a profit. The Bull Market created a sense of confidence that America's economy was strong, and prosperity had seemed unshakable. The Bull Market is reflected as being an 'irrational element in America- the Mania-

  1. "Poland was the most important factor in the deteriorating US-Soviet relations"

    The conflict over Poland was made much more complex by Roosevelt's fickle and inconsistent policy. This and Stalin's refusal of giving democracy in Poland, the level of trust between America and Russia was weakened. Through '43-'44 Roosevelt had supported and endorsed Soviet sphere of influence in eastern Europe.

  2. Prohibition - The Importance of January 16th 1920 to the US.

    However this was not the case for many. Restaurants across the nation were being shut down for lack of sales without the sale of liquor to bring in customers. Entertainment sources were barren from the mass public involved in underground entertainment like speakeasies and back-door saloons.

  1. President Hoover and the Great Depression

    This was partially because of his own trust in individual enterprise, and partially because of political opposition. Towards the end of his presidency particularly, Hoover was being denigrated for his interventionist attitude. Roosevelt used these accusations, and Hoover's guilt for having raised a budget deficit, to advance his own election campaign.

  2. The USA was hit by the Great Depression in 1929 because of increasing restrictions ...

    in source 9 which argues that Coolidge stressed ?no interference to help farmers or workers?. Moreover, the inequalities can be argued to be a consequence of Coolidge?s actions as, as described in source 9, he ?felt the best way to help all parts of the USA was to pursue pro-business

  1. The Great Depression, causes and effects.

    This lead to a spread of the depression. The American government set up the Federal Reserve System to give out loans to commercial banks to support them. The Federal Reserve System gave the go ahead to create federal notes that increase our paper money supply.

  2. To what extent do you agree with the statement that The US Economic Boom ...

    Although the motor industry stimulated economic development, the rate or extent at which prosperity was achieved was dependent on technological advances both in terms of manufacturing and consumerism. Taylorism provided a set of principles that increased worker efficiency and the use of standardized assembly lines leading to mass production made

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work