Mr. Nolan
27 October 2017
U.S. History 11H-4
Document Based Question: What Caused the Great Depression?
Isaac Newton once said, “What goes up must come down.” Although Newton uses this to explain the laws of gravity, the quote is fitting for many different events. The economy, for example, is a cycle which continues to rise and fall throughout history. In the year 1929, the United States’ economy prospered tremendously. The economy continued to expand, until there was no more room for growth. Because the economy had reached its peak, America, along with the rest of the world, soon had economies that were plummeting. The factors that caused the Great Depression started with the overconfidence in the stock market, which led to the …show more content…
As shown in the United States business cycle, when the economy booms, the wages of factory workers increase which cause prices of goods to increase, and the amount of profit made by the factories to decrease. As companies produce less products, the value of money depreciates. Because the demand for products is so high, factories need to raise their prices more to sell them. When people buy these items at inflated prices, factories are making less money because more people are not buying their products. Since the factories are producing less, workers are not needed in the factories and they will be laid off leaving them unemployed (Document A). Between the years of 1926 and 1933, the rate of unemployment increased 23.2 percent in the civilian labor force. (Document E). Companies with rates of high unemployment are not successful because their sales decreased so much that they needed to lay off their workers. In 1929, the people who had an annual income of $1500-$2000 were considered impoverished. $2000 was said to be necessary for buying the necessities of an average United States family. People were not wealthy enough to buy these products because they were making such little income for the year. 60 percent of the American people were under the poverty line. “The wealthiest 5% of the US population received about 33% of the nation’s personal income” (Document K). ****UNEVEN DISTRIBUTION OF