The economic collapse know to many generations as the Great Depression, left families in financial despair, many lived off of food stamps and careful savings. The continuous reactions of financial ruins began in the autumn of 1929. However, the more influential factors such as lack of industrial diversification, poor credit structure, and unstable international debt structure resulted in the Great Depression. In essence, the Great Depression was an avoidable struggle for the American people that would last approximately ten years.
Lack of diversification, the distribution of spending over several industries, aided the fall of the economy. Because the economy of the 1920s relied so heavily on very few industries such as construction and automobile industries, when these industries began to crash, the economy fell as well. Between 1926 and 1929 sales in construction had fallen by $2 billion. Automobile sales declined by over a third of their normal profit. The decrease in income of these key industries prompted other industries to emerge, unfortunately none of them could compensate for the devastating loss. These industries such as, petroleum, electronic and plastics couldn’t develop as quickly as they needed to be in order to successfully replace the diminished industries. The government should’ve invested and pass policies for the benefits of the growing and developing industries. Also the government should have focused on investing in these potential economy stimulates. That way the economic burden would be distributed through each industry evenly, preventing a recession from developing to a depression. Wise preventative measures from the government and an equal market could have prevented the Great Depression. The credit structure of the economy trapped farmers in a cycle of crippling debt. …show more content…
The combination of the low consumer demand and new technologies that allowed farmers to produce more resulting in overproduction meant that the crops would be sold much cheaper than usual. Agricultural production was to great for the Markets to handle, the farmers could not earn enough profit to compensate for the price of production. The farmers, now deep in debt from the newer technology like tractors as well as land purchases, could not pay off their loans because they did not make a decent income off the low crop prices. The unpaid loans of the farmers led to the failures of small banks. Larger banks were in trouble too; many banks gave loans and recklessly invested in the stock market. The loans were never to be paid off and the stock market crashed, leaving some banks to go bankrupt. Others, made matters worse by calling loans due and shortening credit contracts that the borrowers couldn’t afford. International debt structure was extremely unstable and fragile circle, essentially the European countries all owed each other and America. In the aftermath of World War I, the remaining countries of the Triple Alliance, Germany and Austria were forced to agree to pay large reparations at the treaty of Versailles. Since …show more content…
An average of 20% of the American workforce saw themselves unemployed; the others mostly found themselves with less hours and pay. Had the American government acted responsibly, the severe depression could have been prevented. The Great Depression could have been avoided; changes in industrial wealth distribution, credit structure and the dealing of the unstable international debt structure would have secured America from the Great
Lack of diversification, the distribution of spending over several industries, aided the fall of the economy. Because the economy of the 1920s relied so heavily on very few industries such as construction and automobile industries, when these industries began to crash, the economy fell as well. Between 1926 and 1929 sales in construction had fallen by $2 billion. Automobile sales declined by over a third of their normal profit. The decrease in income of these key industries prompted other industries to emerge, unfortunately none of them could compensate for the devastating loss. These industries such as, petroleum, electronic and plastics couldn’t develop as quickly as they needed to be in order to successfully replace the diminished industries. The government should’ve invested and pass policies for the benefits of the growing and developing industries. Also the government should have focused on investing in these potential economy stimulates. That way the economic burden would be distributed through each industry evenly, preventing a recession from developing to a depression. Wise preventative measures from the government and an equal market could have prevented the Great Depression. The credit structure of the economy trapped farmers in a cycle of crippling debt. …show more content…
The combination of the low consumer demand and new technologies that allowed farmers to produce more resulting in overproduction meant that the crops would be sold much cheaper than usual. Agricultural production was to great for the Markets to handle, the farmers could not earn enough profit to compensate for the price of production. The farmers, now deep in debt from the newer technology like tractors as well as land purchases, could not pay off their loans because they did not make a decent income off the low crop prices. The unpaid loans of the farmers led to the failures of small banks. Larger banks were in trouble too; many banks gave loans and recklessly invested in the stock market. The loans were never to be paid off and the stock market crashed, leaving some banks to go bankrupt. Others, made matters worse by calling loans due and shortening credit contracts that the borrowers couldn’t afford. International debt structure was extremely unstable and fragile circle, essentially the European countries all owed each other and America. In the aftermath of World War I, the remaining countries of the Triple Alliance, Germany and Austria were forced to agree to pay large reparations at the treaty of Versailles. Since …show more content…
An average of 20% of the American workforce saw themselves unemployed; the others mostly found themselves with less hours and pay. Had the American government acted responsibly, the severe depression could have been prevented. The Great Depression could have been avoided; changes in industrial wealth distribution, credit structure and the dealing of the unstable international debt structure would have secured America from the Great