The Great Depression was a period of economic turmoil that began in 1929 and lasted approximately ten years. Many changes took place in the 1930s. Many problems faced the country that eventually led to depression. Only a decade later, the United States was in the “Roaring 20’s”, a period of happiness and success, but it became a difficult country to live in. Multiple factors causing fear and poverty within a very short time led to the Great Depression. Our country flourished during the “Roaring Twenties”. It was right following World War I. People were still trying to get everything together. Leading economists believed that the United States would experience continued economic growth due to the rapid rise in industrialization. The average income realized rose from $74.3 million to $89 trillion and the average per-capita income increased seventy five percent. Even during the prosperous 1920’s, there were warning signs and causes that a great depression was on its way. The Great Depression was caused by uneven distributions of money between the rich, middle class, and farmers, as well the differences between Europe and America in the 1920s. This led to a highly unstable economy. The average manufacturing output increased by 32 percent between 1923 and 1929, while the average wage for those working in manufacturing increased only 8 percent. Wages grew at a rate of one-fourth the productivity increase, which caused them to rise at a faster rate. Production costs dropped quickly and wages rose slowly. Prices remained constant. The bulk of the productivity increase went to corporate profits rather than individual profits. The wages of workers didn’t rise, but they did so quickly. The products were not affordable to the middle class, and the company lost money. This uneven wealth distribution is discussed in a 1932 Current History article. “We still long for daily bread. There is still too much bread, wheat, corn, oil, and nearly every other commodity that man needs to sustain his material happiness and subsistence. The abundance of modern farming, mining, manufacturing methods makes it impossible to buy.
In addition, farmers were growing more crop crops than they could sell. The uneven distribution of wealth in America between Europe was a result of the imposition tariffs on imports. The wealthy were reluctant to pay, so they stopped lending money outside of the United States. The New York Stock Market crashed on October 29, 1929. Because they believed the economy would succeed, many people had put all their money into the stock market. Stocks were sold quickly, with 16 million shares being sold. Stock prices plunged to fractions in many cases. Stock market losses and Americans not being able to pay back their loans led to banks losing money. The 1930’s saw 25 percent unemployment among the country’s workers. 13 million people were unemployed, many of them homeless. The first to lose their jobs were often the unskilled and black workers. Farmers were poor and couldn’t pay their mortgages. The income of middle and poor families was less than $2500 annually. 1 in 4 Americans lost their jobs during the depression. Farmers took to the streets and donated their milk to other hungry people, instead of letting it spoil. The Agricultural Adjustment Act was passed in 1933 to aid farmers who were most affected. The result was a rise in farm prices due to the production of fewer crops. These farmers were able to get low-interest loans through the Agricultural Adjustment Act, so they wouldn’t lose their farms to banks who held their mortgage. The credit system was also created by the Great Depression. Many people believed they would be capable of repaying the loan later, even though they couldn’t afford to purchase the goods they wanted. The concept of credit quickly caught on and credit cards were created. Credit cards could be used to purchase anything, cars or groceries. After they earned their paychecks they would repay it. This idea was popularized well into the present, even after the Great Depression. Many factors contributed to the Great Depression. However, the two main causes were the extremely uneven distribution and high levels of stock market speculation. It was a devastating economic event that affected all Americans.
