The Great Depression started primarily due to the stock market crash, and the adherence to the Gold Standard. The stock market crash occurred near the beginning of the depression resulting in the loss of much money in companies. It also lead to less
industrial production and the loss of consumerism.
"First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise." (Henrietta)
The strict adherence to the Gold Standard didn’t help. Banks were forced by the Republican Party to try and protect the country’s gold and save the economy from collapse at the same time. This resulted in the loss of billions of dollars out of U.S. banks. The Depression caused many chain reactions as well.
"We had to struggle with the old enemies of peace— business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob." (Henrietta)
The Republican Party, in an attempt to protect the Gold Standard. put in place tariffs which further drained money from the people.
While the stock market crash is certainly a major contributing factor, it is not the only cause of the Great Depression. Overproduction during World War I caused a sharp decline in the price of agricultural goods, and as many farmers had gone into debt in order to modernize, this was disastrous. Foreclosures skyrocketed, and it is widely believed that coupled with drought, hundreds of acres of decrepit, foreclosed farmland contributed to the Dust Bowl . In 1932, Roosevelt spoke to the Subcommittee on Labor in the House of Representative where he delivered the following anecdote involving a conversation with a farmer:
"'I came to this country without a cent, but, knowing my onions, and by tending strictly to business, I finally accumulated two sections of land and a fine herd of Cattle. I was independent.' I remarked that anybody could do that if he worked hard and did not gamble and used good management. He said, 'After the war, cattle began to drop, and I was feeding them corn, and by the time I got them to Chicago the price of cattle, considering the price of the corn that fed them, was not enough to even pay my expenses. I could not pay anything.' Continuing, he said, 'I mortgaged my two sections of land, and to-day I am cleaned out; by God, I am not going to stand for it.'" (Roosevelt quoting Isaacs)
The speech continues to describe the farmer who told Roosevelt that he would participate in an armed rebellion, mentioning capturing a fort with machine guns, batteries of artillery, enough for a well supplied army to cut off the East.
"That Man may be very foolish, and I think he is, but he is in dead earnest; he is a hard-shelled Baptist and a hard-shelled Democrat, not a Socialist or a Communist, but a plain American cattleman whose ancestors went from Carolina to Tennessee, then to Arkansas, then to Oklahoma..." (Roosevelt)
The 1920s were an era of consumerism, and buying on credit was common in all fields. The plight of the farmer became the plight of the consumer when in the wave of uncertainty after the stock market crash, hundreds rushed the banks. There was no distinction between investment banks and commercial banks, and so with all their money lost in stocks, people found themselves with their bank accounts empty, and with payments on cars, washing machines and other consumer items from the previous decades piling up.
The stock market would recover, surprisingly quickly actually, but the damage had already been done.
industrial production and the loss of consumerism.
"First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise." (Henrietta)
The strict adherence to the Gold Standard didn’t help. Banks were forced by the Republican Party to try and protect the country’s gold and save the economy from collapse at the same time. This resulted in the loss of billions of dollars out of U.S. banks. The Depression caused many chain reactions as well.
"We had to struggle with the old enemies of peace— business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob." (Henrietta)
The Republican Party, in an attempt to protect the Gold Standard. put in place tariffs which further drained money from the people.
While the stock market crash is certainly a major contributing factor, it is not the only cause of the Great Depression. Overproduction during World War I caused a sharp decline in the price of agricultural goods, and as many farmers had gone into debt in order to modernize, this was disastrous. Foreclosures skyrocketed, and it is widely believed that coupled with drought, hundreds of acres of decrepit, foreclosed farmland contributed to the Dust Bowl . In 1932, Roosevelt spoke to the Subcommittee on Labor in the House of Representative where he delivered the following anecdote involving a conversation with a farmer:
"'I came to this country without a cent, but, knowing my onions, and by tending strictly to business, I finally accumulated two sections of land and a fine herd of Cattle. I was independent.' I remarked that anybody could do that if he worked hard and did not gamble and used good management. He said, 'After the war, cattle began to drop, and I was feeding them corn, and by the time I got them to Chicago the price of cattle, considering the price of the corn that fed them, was not enough to even pay my expenses. I could not pay anything.' Continuing, he said, 'I mortgaged my two sections of land, and to-day I am cleaned out; by God, I am not going to stand for it.'" (Roosevelt quoting Isaacs)
The speech continues to describe the farmer who told Roosevelt that he would participate in an armed rebellion, mentioning capturing a fort with machine guns, batteries of artillery, enough for a well supplied army to cut off the East.
"That Man may be very foolish, and I think he is, but he is in dead earnest; he is a hard-shelled Baptist and a hard-shelled Democrat, not a Socialist or a Communist, but a plain American cattleman whose ancestors went from Carolina to Tennessee, then to Arkansas, then to Oklahoma..." (Roosevelt)
The 1920s were an era of consumerism, and buying on credit was common in all fields. The plight of the farmer became the plight of the consumer when in the wave of uncertainty after the stock market crash, hundreds rushed the banks. There was no distinction between investment banks and commercial banks, and so with all their money lost in stocks, people found themselves with their bank accounts empty, and with payments on cars, washing machines and other consumer items from the previous decades piling up.
The stock market would recover, surprisingly quickly actually, but the damage had already been done.