The 1930's - the great depression

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G.C.S.E History Coursework

ASSIGNMENT 1

Task 3

In the 1930’s the great depression began. I think it all started because of over production. Americans who could afford new, expensive goods already had them. This led to factories over producing goods because they could not sell everything they were making. This obviously meant that companies did not make a profit. Soon they had to start cutting their costs which was bad for workers because their wages were cut and some were made unemployed. This only made matters worse because now the workers had less money to spend which meant they could not buy so many goods. Companies now had to sack even more people to stay in business. This made matters even worse because people had even less money to spend. More and more workers started to be unemployed. So this was going down hill for the workers. Soon it reached rock bottom for the companies as well because some were going bankrupt and others went out of business. As you can see, one bad move led to the next.

I think that trade tariffs, republican government policies, unequal spread of wealth, credit buying, over production, speculation on the stock market and the Wall Street crash were the main causes of the great depression.

I will look at each cause in turn and work out which one is the trigger cause, I will find out if there was a cause which started off a chain of events. I will say if they were a long, medium or short term cause and how the causes could be linked. I’ll also work out if a cause didn’t happen, how it would have changed the chain of events and finally I will find out which cause was the most important.

One way of making money during the 1920s was to buy stocks and shares. Prices of these stocks and shares constantly went up and so investors kept them for a short-term period and then sold them at a good profit. As with consumer goods, such as motor cars and washing machines, it was possible to buy stocks and shares on credit. This was called buying on the margin and enabled speculators to sell off shares at a profit before paying what they owed. In this way it was possible to make a considerable amount of money without a great deal of investment.

On 3rd September 1929 the stock market reached an all-time high. In the weeks that followed prices began to decline. Then on 24th October, over 12,894,650 shares were sold. Prices fell dramatically as sellers tried to find people willing their shares. That evening, five of the country's bankers, led by Charles E. Mitchell, chairman of the National City Bank, issued a statement saying that due to the heavy selling of shares, many were now under-priced. This statement failed to halt the reduction in demand for shares. On 29th October, over 16 million shares were sold. The market had lost 47 per cent of its value in twenty-six days.
Although less than one per cent of the American people actually possessed stocks and shares, the Wall Street Crash was to have a tremendous impact on the whole population. The fall in share prices made it difficult for entrepreneurs to raise the money needed to run their companies. Within a short time, 100,000 American companies were forced to close and consequently many workers became unemployed. As there was no national system of unemployment benefit, the purchasing power of the American people fell dramatically. This in turn led to even more unemployment. I think this cause was not the beginning of the great depression as it was only small cause and it did not last long but it would have definitely dampened the spirits of many people and probably contributed towards the great depression.

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I think this cause was linked to share buying as because of the heavy share-selling, many were now under-priced therefore resulting in the crash.One reason why the boom did not continue and the Depression began was the fact that the economy was actually fairly weak to begin with. A lot of US citizens were never participating in the boom from the start. The US economy did look strong during most of the 1920's with new gadgets and new hobbies - but not for the majority of people. There were some wealthy individuals but 60% of people wer living below ...

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