sell it and this meant income was getting lower and lower. The other reason connected to the farmers overproducing was the fact that World War 1 had ended which meant they had to stop selling their produce to European countries as the soldiers had gone back home and would be producing their own goods, because during the First World War the European countries bought produce from America as their men were out in the front. Also because there was a decrease in population, which meant there, were less people in America to buy the goods. Because of this the rich were getting richer and the poor were getting poorer especially the farmers and the ethnic minorities. The farmers and the ethnic minorities were already in depression, as they could not afford to buy any of the consumer goods and if they could they could not afford to pay for electricity or the fuel to use them.
Actions of the banks was also a cause of the Great Depression although it a was a short term cause as it this only became apparent after the Wall Street Crash that the banks had leant too much money to the speculators. In the sense that they should not have leant so much money to anybody and everybody they would also not have lent the savings of some people out to other people. They also encouraged people to borrow money, which made them go into debt, which led to the Great Depression, as the speculators who had borrowed money could not pay the banks back as they had no jobs
and the share prices had gone right down. The government was also to blame for the actions of the banks as they had given the banks too much freedom and had allowed them to lend as much money as they wanted to people. The government could have had control over this by limiting the amount of money they could lend to the people.
Actions of the speculators was another short term linked to the action of the banks as the banks were the reason the speculators were borrowing so much money. Action of the speculators is also connected with over confidence, because in the 1920s the speculators were so confident that the share prices would keep rising. This a cause of the Great Depression because they were borrowing so much money from the banks and the banks were lending the speculators all this money out of other peoples savings, which meant when the Wall Street Crash occurred the people who had savings in the banks and had nothing to do with the share buying and selling they lost all of their money because the banks had lent the money to the speculators. Also the speculators were also buying on the margin, which meant the speculators were paying only a ten percent of what the share price was and the banks were paying the other ninety percent. When the Wall Street Crash occurred the banks wanted their money back and because the speculators could not give it back the banks started to take the property and homes this left most of the people in America homeless.
Overproduction was made worse by the actions of the government. It was long-term cause of the Great Depression. It also made the inequality between the rich and the poor worse. As the poor could not afford to buy the consumer goods. Overproduction started to become a problem by the mid twenties. It helped cause the Great Depression because the Americans who could afford to buy the consumer goods i.e. radios, fridges, hovers, cars e.t.c had them
In addition to this there was a loss in the export market. This was a long-term cause of the Great Depression. This also made overproduction worse, because the government had put tariffs on goods from abroad so that the Americans would buy American goods and not goods from abroad during the beginning of the 1920s. This worked during the beginning. Because due to the tariffs the goods from abroad was too expensive for the people of America so they only bought American goods. This added to the success of the boom at first but after a while other governments retaliated and put tariffs on American goods which meant America could not sell its surplus consumer goods abroad as it was too expensive because the other governments had put tariffs on American Goods. And when they could not sell the surplus consumer goods in America either because more Americans were unemployed, which meant they could afford it, even when the companies reduced the prices
even less then the goods were worth they could not sell it. So in the end the companies had to shut down.
All of the factors mentioned above led to the Wall Street Crash, which in turn led to Great depression. The Wall Street Crash occurred when firstly there was overproduction. Secondly the Wall Street Crash was linked to money and the stock market. Due to the fact that people were allowed to borrow as much money as they wanted and the banks and government did nothing about this more and more people were in debt so when the share prices started to decrease the banks wanted their money back and because the Americans could not pay them back the banks started to take the property and land of the people in order to take back the money they were owed. Also a lot of people had invested their savings on the stock market and this meant when they were selling them they
did not get back what they had invested therefore they lost a lot of money as the value of the shares was not worth a lot now. So they would sell their shares for less money then they had originally invested in the stock market therefore this created poverty, which led to the Great Depression. The other problem was the banks did not have enough money to help the businesses that were in trouble. This was because they had lent too much money to everybody that they did not have enough left in the banks themselves. Because the banks did have the money to lend out they started to ask the people they had loaned the money to back, because the people did not have the money and therefore could not give it back the banks took the property of the people which left them homeless this was how their debt got paid back.
