The Causes And Consequences Of The Great Depression

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Register to read the introduction… By making credit uncomplicated, their debt thickened with each good on credit. Since a number of people had difficulty in paying off their debts, consumers decreased their spendings. According to Danziger another probable cause of the Great Depression was the irregular income distribution. Since 1920 to 1929, the wage of the wealthiest 1% increased by 75%, while only a 9% raise as a whole. More than 75% of families made less than $2500 annually (Danziger 22-56).
Due to these reasons problems in the stock market arose. The stock prices increased all through the 1920s. Enthusiastic to make quite a few bucks as soon as possible, a number of average U.S citizens conjectured, or purchased stocks with no knowledge. The government did not to a lot either to end the buying and selling. Then the worst
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On the other hand, quite a few banks invested their capital in the stock market. Through 1933, 11,000 of 25,000 banks in America went bankrupt. Through 1929 and 1932, the gross national product (G.N.P) was almost cut in half. Approximately 90,000 businesses went insolvent. Unemployment increased from 3% to 25%. This also affected those people who still had jobs as they began receiving lower salaries.
America was not the only country to be effected by the Great Depression. Several other European countries that were still in the process of recovery from World War I faced high war debts. The Great Depression was merely an addition to the problems they had to face by limiting America’s capability of importing goods from Europe. It made it complicated to trade U.S products and goods in Europe.
To amalgamate the problem further, Congress passed the Hawley-Smoot Tariff Act. The act launched maximum tariff in the history of the United States of America. By restricting the quantity of goods flowing into America, the tariff prohibited other nations from purchasing American goods. Unemployment increased in industries that exported products into Europe. Other countries increased their own tariff, consequently causing world trade to decrease more than

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