Money In The American Economy example essay topic

The Depression was a period of time after the economic boom of the 1920's in America, when the economy went downhill. People lost money, jobs, shares, businesses went bankrupt and the farming industry suffered greatly. The Republic Government at the time lead by Hoover was still following policies of Lassez Faire so business was not getting the support it needed to get it back on track. The Republic Governments Protectionist policies were one of the causes of the great depression. There were trade problems associated with their protectionist policies. The Republic Government made high tarries on imported goods.

This was to make sure that the Americans were buying their own products. Buying American products meant that they would be keeping the money in their economy instead of sending it to other countries. Other countries, now unable to export goods to the Americans retaliated by increasing their tarries on american goods. America could no longer export their goods to other countries.

Mass production meant that there was more goods being produced than what needed to be but because other countries had high tarries on American goods, they could not be exported. Output became greater than demand so goods cheapened in price. American goods were not being sold. This resulted in cut-backs in production which meant that there was less employment available so people lost their jobs. Profits being made lessened and so did the value of shares. A lack of regulation in the stock market was also a cause of the great depression.

Most shares that were changing hands were done so through borrowed money. Buying shares on the margin this way worked very well when share prices were rising. When prices began to slow down or cheapened in value however, trouble arose in the stock market. Seventy five per cent of share prices could be borrowed. This caused a lot of speculation which helped to increase share value further. The Federal Reserve Board gave easy credit to share holders and taxes were cut so that more money was available.

This lack of regulation created more speculation which caused more share prices to increase. The farming problems in the United States increased and were one of the causes for the depression. Because of mechanisation there was over production of goods by farmers. There were large surpluses of food.

It could not be exported because of high tarries on American goods in other countries. As a result of this surplus American goods cheapened. Farmers began borrowing mortgages because of low interest rates. The Farmers found that they could not pay of their mortgage debts and got evicted from their residences and farms as a result.

Workers lost their jobs because the employees were no longer in control as they had been evicted because they couldnt pay off debts. International Debt was another cause of the depression in the United States. The United States was still being effected by International trends. Even though the US was going through a stage of prosperity, the International economy was still recovering from war. There were war debts that needed to be re payed to other nations.

There were reparation repayments that needed to be payed because of the effects of the war. Also the depression and inflation of Germany which was Europe's largest economy had an impact on the economy of the United States. The Wall Street Crash was a trigger for the collapse of the United States economy. On Tuesday the 24th of October lots of investors tried to sell their shares at once. this made share prices drop very fast. by the end of the day the stock exchange had lost four billion dollars. Many of the stock brokers sold shares on margin. To buy shares to begin with they had to borrow money from the banks. when the stock prices began falling the brokers needed to repay their debts to the banks. the only way to do that was if their customers payed them back. the customers had to sell their shares to pay the brokers back and they were desperate so they were selling for any price they could get.

Hoover Reacted to the Depression in a number of ways. the first was through volunteerism where he asked large business to keep their wages the same and keep the same level of employment. Hoover also cut tax by $160 million. He convinced congress to lend him $423 million for public works projects to help with unemployment. Hoover later encouraged congress to pass The Agricultural Marketing Act which would lend $500 million to help farmers.

He increased tarries on goods from other countries to keep the money in the American economy. He also set up the Reconstruction Finance Corporation to help finance companies and banks that were experiencing financial difficulty. Lassez Faire was a Republic Government policy. Hoover believed strongly in Lassez Faire and in business surviving without the Government's intervention. there was no Government interference in the US economy or business. Lassez Fari e meant there was no high taxes in business or personally. It also meant that there were no minimum wages so that employees could chose to pay workers as much as they saw fit.

Hoover tried to fix the pending depression with volunteerism. volunteerism was when Hoover got the large business leaders together to ensure that they maintained their current wages and rate of employment. It made unemployment a local issue but got the state government to create and organise public works projects. In 1931 Hoover convinced the larges largest bankers to form the National Credit Corporation to lend smaller banks money for business loans. He as lo cut personal taxes and increased government spending to $2.2 billion in 1931. Volunteerism however failed. IN 1931 The large businesses bloke their pledges and cut wages.

Unemployment continued to rise. Farmers during the depression were the lower class in society. they had less money than the rest of the Americans. Mechanisation caused mass production which caused a surplus in produce. The surplus of goods cheapened the value of produce and there were no export markets to sell to. the farmers were forced to produce less which meant that less workers were needed, and they were making less money. they also had mortgages that they could not pay for so were evicted and went bankrupt and lost their farms.

Employment rates and living standards decreased during the depression. Worker's wages decreased and unemployment was on the rise. people became homeless and had to live around the city's in slum areas they liked to call hooverville's. suicide rose as a result of debts and the pressures being put on people who couldnt handle it. ill health rose as a result of poor hygiene and living conditions. Elderly people were robbed of pensions and and so had nothing to live for anymore. Women before the depression had begun getting involved in the stock market. so during the depression they lost money like the men did. They were only a percentage of the people involved in the stock market however, it was mostly still men. Women also stopped buying as many labour saving devices during this time.

African Americans during the Depression were mostly still working on farms. They suffered like the rest of the farming population with debts and surplus produce. Hoover did not do all he could to stop the economic depression. he did what he believed in though, and he made attempts to get the economy back on track. He was only human in his actions, you can not do something if you dont feel it is right. and he was not going to help his nation if he thought he was going the wrong way about it.