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

We have every reason to believe that fear played an important role in the Great Depression.

Extracts from this document...

Introduction

We have every reason to believe that fear played an important role in the Great Depression. I would not go as far as to say that it caused it; it is more analogous to the fuel that fed a tiny flame into the conflagration, it exacerbated it, but did not cause it. Nor do I believe that the depression is in any way caused by the stock market crash. The crash was merely a symptom of a failing economy, not the cause. The cause of the Depression should not be treated as an American problem because its origin was global. The Depression was prevalent in Europe years before the Great Depression came to America. Then, you might ask: How did the Depression start? The Depression was mainly caused by the devastation of World War I, factories were in shambles in Europe, and crops failed to grow on war torn ground. However, at this crucial time, US adopted a policy of isolationism. All the presidents of the 20s, Harding, Coolidge and Hoover, combined to raise tariffs to an all time high. Thus, Europe's factories cannot sell their produce, since everywhere else (other than US), people were poverty-stricken and cannot afford luxury products; hence Europe's economic system start to fail. ...read more.

Middle

Irving Fisher, an economist from Yale, noted that "Stock processes have reached what looks like a permanently high plateau"(McElvaline 47). Soon, some people began to sell to take in their profits. (McDuffie 168) In September, prices began to fall. At this time, fear came into play. The continuous falling prices shook even the confidence of many financial professionals, who joined in the ranks of the panicking sellers. The loss of confidence was the key to exacerbating the Depression. "Among other things, the fragile economy was heavily dependent upon confidence and the spending and investment of the well to do. These were precisely the things that the Crash most effectively undercut." (McElvaline 49) Adding to this crisis, Herbert Hoover insisted, "prosperity was just around the corner"(McDuffie 169), that there's no need for direct aid. At the same time, hundreds of thousands of people became homeless and lived in shacks called Hoovervilles. (McDuffie 170) Although Hoover's confidence seemed undiminished, those of typical Americans were just the opposite. After the crash, millions of Americans rushed to their banks, demanding money back. Many banks had to call back their loans and caused many businesses to fail; and in the end, the bank themselves failed, leaving many others losing their savings. ...read more.

Conclusion

Americans were afraid of losing their jobs, their livelihood. They lost confidence in their economy, namely in the banks and the stock market that they foolishly withdraw their money and tried to sell their stocks. The stock prices were low, they should have been buying, not selling. The banks needed money; they shouldn't withdraw money but should save more. But they were too afraid. During the Hoover administration, the government believed that all this is just a natural cycle of the economy, that everything will be okay and "prosperity is just around the corner"(McDuffie 169). Roosevelt administration took more drastic measures; although many still argue that it did not end the Great Depression, we can at least be sure that it did provide relief to hundreds of thousands of suffering people. Americans today do not have to worry as much about the economy because now everything is more regulated. With the FDIC, we can now be sure that our money in the banks is safe. We can no longer buy stocks on margin, thus we would not have such dramatic crashes as those in 1929. Finally, we understand the economy a lot more than we do in the 30s, with the passing of the Employment Act of 196, the president now have the expertise of the Council of Economic Advisors to instruct him. If anything similar to the Great Depression occurs in the future, we would know how to deal with it. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE USA 1919-1941 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 GCSE USA 1919-1941 essays

  1. The Wall Street crash, the great depression and its how it affected the lives ...

    These people were able to live their sumptuous through the depression and for a far cheaper price.

  2. What caused the great depression?

    These credit systems worked fine until some investors wanted to sell shares and not buy and also they wanted to sell for money, not credits. Many companies began to lose the amount of shares sold, and also lose profit on the stock market.

  1. Was the Great depression well under way before the collapse of the stock market ...

    Investors actually lost their money, aswell as Businesses and industries who lost huge investment assets, and as a result of the Great Depression could not avoid the adverse effects of bankruptcy. Some sources are adamant that specific industries in the USA were suffering the effects from the depression in the 1920's; these industries were strictly farming and cultivation.

  2. Why Did The Policies Of President Hoover Fail To Combat The Great Depression Effectively?

    The Agricultural Marketing Act was passed in 1929, creating a nine-person Federal Farm Board with funds of $500 million to create 'stabilisation corps', and the crops created were eventually bought back at higher prices. The agricultural policy failed for two reasons: firstly because it paid US farmers artificially high prices

  1. The crash (causes and consequences)

    A big profit could be made for a very small investment. Brokers took this risk because they were so confident that the prices of shares would keep on rising. The share bubble of speculation While confidence remained, the share boom continued.

  2. In 1932 America was suffering from a terrible economic depression.

    As Roosevelt came in to power he brought down the unemployment by bringing in the alphabet agencies but the realised the federal government were putting too much money in so they cut back, unemployment began to rise again. As World War II approached unemployment began to lower as jobs were

  1. What were the causes of the great depression?

    This led to the unemployment level rising greatly to 12 million by 1932. By this time the majority of people could afford no luxuries and many couldn't afford to pay their mortgages, which led to many evictions. By October 1929 people started to sell shares for whatever they could get for them, which resulted in share prices tumbling drastically.

  2. The Great Depression

    Today, looking back at what happened and dissecting these four main causes, I think it is safe to say that they all came hand in hand. It was basically a cause and effect action. When one thing occurred it made all the other causes fall into play.

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