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The Great Depression

The Great Depression:
A Series of Downward Spirals

Class: Macroeconomics
Teacher:

On October 29, 1929, the New York Stock Exchange experienced a tragic fall. Fortunes were lost and lives were destroyed. The Crash of 1929 shook what was an already unstable economic foundation. America began fueling itself for an economic collapse long before the stock market crashed. The root causes of the crash are still under debate, but the effects of the crash are infamous. America was thrown into economic turmoil. Thousands and thousands of people lost their homes and were unemployed for years. This period of despondency lasted from 1929 until 1939 and was known as the Great Depression. While the stock market crash is the most immediate and well known cause of the Depression, it was by no means the only cause.
Modern economists have different theories explaining the sudden downfall in the economy. Some feel that abuse of credit was the cause, while others believe it was overproduction. The monetary policy of the 1920's was laissez faire, as well as America's economic involvement with Europe at the time. American policy makers at the time felt that an isolationist approach would benefit the country. By isolating America, economists believed they would prevent Europe's problems from spreading. While we created enough problems of our own, Europe's woes began to affect America directly, especially after the tariffs America instituted. America created too many problems of its own in the 1920s, which led to numerous, inescapable downward spirals.
President Herbert Hoover felt that the best way to straighten the economy was to leave it alone. He strongly felt that America would correct itself. His first action was attempting to balance the budget by raising taxes and cutting government spending. His actions as President did very little to help the economy, yet he continued to do nothing, still claiming that America would correct itself. Hoover's...