Explain how both the long-term and the short-term causes contributed to the great depression in the USA.

The McCumber tariffs in America helped out the large companies to begin with because there was no competition for their goods. Europe was suffering from these tariffs though because of their situation after World War One and their desperate need for profits from their export market. Europe had to put up tariffs as well to save its economy. Europe had bought form America to begin with because they could not produce their own goods. Once they were able to produce their own goods especially food they out up tariffs against produce from America. Britain in particular put up tariffs against America because they could now produce their own food and the reparations from Germany helped to rebuild their industry. In the years just after the war the European countries especially France could not grow food from their land because there was so much lead sown into it from bombs and bullets. The high tariffs from both sides made it impossible for any export trade what so ever. This hit the large industries in America hard because by this time the American market was saturated and the only thing that was stopping them from decreasing production and decreasing workers was the export market. This was a long-term cause because the tariffs had been in place since 1923. The companies had to gradually reduce their production rate as the export market closed.

The farmers of America were hit hardest as usual by the closure of the export market because they were ludicrously overproducing and being able to sell it to European countries saved them. Twenty Five percent of all profits made by farmers came from the export market. The government had encouraged the farmers to improve the efficiency of their production so that they could produce more each year. This had advantages to begin with because farmers then had combine harvesters and had much bigger pieces of land. The farmers then became too efficient, they flooded the market with their produce, and they had produced far more food than America could eat. The farmers were saved by the export market were they could export all their surplus produce. Then when the European countries got their farming industry working again with the help of German reparations, they put up tariffs disabling the American farmers form exporting their surplus. The farmers had to sell their goods so they lowered the price, in some cases they lowered it so much so that they would only break even or even be in debt. The government did nothing to help the farmers. They were far more interested in industries such as car manufacture, where the profits were much greater. It was not only farmers in this position; the working class across America who were already poor became poorer. Since the working class of America was 43% this meant that they had a very big problem on their hands. This brings us back to the issue of misdistribution of wealth in America. This was definitely a long-term cause because the working class had been suffering, especially the farmers throughout the Golden Twenties so it was not as if it was a sudden problem.

The banks policy towards money lending and credit was very wrong. They believed that with the prosperity of the country and the ever-strengthening economy everyone would be able to pay back their loans. The banks were also giving out massive international loans, in some cases the bank was giving out more money than was asked for. Many people as we already know were taking out loans form the banks and investing it in the stock market. This was very dangerous because if the shares did not go up in value then the bank would not be paid back. The banks were not being very thorough in their research of their clients. It is definitely expected of banks that they should ask their clients what the money is for. I am sure that if the banks knew that the money they were lending was being invested in the stock market they would not have leant it out. Many people did invest borrowed money into the stock market though, so the money in the stock market would not have actually belonged to the people investing it, they would only own the profits from their shares. This also meant that people would not have stuck by their shares in the hope that they would go up like a stockbroker. This is also a long-term cause because people have been investing borrowed money throughout the 1920's and the banks have been lending out money to foreign countries during the war.

The laissez-faire policy of the government helped the larger trusts and industries but was very bad for the poorer people. The laissez-faire policy of the government meant that they did not interfere with the lives of the people. For the rich people and the large trusts this was very good because they would continue to get richer. The downside to the policy was the definite difference between rich and poor. The government did nothing to help the poor people who needed it whilst they did help the large trusts by methods such as the McCumber tariffs. The farmers during the 1920's were in desperate need of government help, both financially and structurally. The government during the 1920's when they were aware of the mass overproduction of the farmers should have put quotas on the amount of produce each farmer could make. This would have brought the value of farm products up and helped the farmers enormously. The government was not interested in the farmers though because they viewed it as a low profit industry, they were more interested in the car industry for example. The government were very short sighted in their views. They did not see that the American market would soon be saturated with cars, vacuum cleaners and radios whilst the farming industry would always be a source of income.

Many farmers became unemployed because they had to claim bankruptcy due to the lack of profit from their produce. The government did not give the farmers or any other unemployed people for that matter any benefits. This mean that the poorer would simply get poorer and the rich would get richer. Another problem the government overlooked was the credit disaster. They could surely see that with all these goods and shares being bough on credit that there was eventually going to be a problem. How could they have allowed the credit to go on and on? It was only the very rich 1% of the population that were able to buy anything everyone else simply borrowed money. This is another long-term cause because the government had been in power throughout the 1920's.

Finally the Wall Street Crash, some people believe that it is the sole reason for the depression, but as you can see above there were many long-term causes and not just this short-term cause to contribute. The Wall Street crash in my opinion is more a symptom of the Great Depression. The Wall Street Crash was caused by the reasons above. But because of the Wall Street crash businesses went bust which caused unemployment. This means that there was less money to spend causing other businesses to go bust or cut back on production. More people are made redundant or wages cut, which again means there is less money to spend and more businesses go bust. Followed again by more unemployment eventually leading to the great depression.

As you can see there was many cause for the Great Depression, but surprisingly there were more long-term causes than short. This is surprising because it seemed so sudden that the depression came about. One day everyone was rich the next everyone was poor. When we look closely at 'The Gold Twenties' or 'The Jazz Age' they were not as good as they were made out to be. There were still the farmers and the working class a massive 43% of the population who were classed as poor. The only real winners in the 1920's was the elite 1% of the population who had 19% of the total spending power throughout the country.