How America Fell into the Great Depression Essay

Submitted By kaccmacc
Words: 1735
Pages: 7

How America Fell into the Great Depression Most everyone has at least heard of the Great Depression that hit America by storm in the early twentieth century. Even though people are taught about the Great Depression, I personally think that a lot of people do not understand the severity that it caused and the lives that it forever changed. The Great Depression was a worldwide horror of economic problems. The Great Depression varied in many nations, but mainly started in 1930 in most places and ended in the mid 1930’s and around 1940’s. This depression was the most serious and worst depression in the twentieth century. This depression originated in the U.S. after the stock market prices fell in 1929. In today’s 21st century, they use the Great Depression on how far the economy can drop and fail. The Great Depression has many effects on countries, making people rich and poor, personal income, tax revenue, profits and prices drops, while the trade market plunged higher than fifty percent. Unemployment rose and rose quick, the U.S. rose twenty five percent over time and in most countries rose over thirty percent. During the Great Depression, unemployment rose from eight to fifteen million and the gross nation product had decreased from one hundred and three point eight billion to fifty-five point seven billion. You may not see this as a huge change or transition of money, but it is. The economic collapse was terrifying in its scope and impact. By 1933, the average family income had dropped forty percent, from around two thousand in 1929 to just about a thousand for years
Sanford 2 later. For example, in the Pennsylvania coal fields, three or four families crowded together in one-room shacks and lived on wild weeds. In Arkansas, families were found inhabiting caves. In Oakland, California, whole families lived in sewer pipes. The pay cuts and unemployment made it hard for families to pay their bills and feed their families.
The United States experienced a banking panic through the fall of 1930 to the winter of 1933. The banking panic lead to countless people demanding their money deposits to be paid to them in cash. People lost all confidence in these banks and wanted back all of their money. Unfortunately what people did not understand is that a bank does not keep all of the money that depositors have placed in the bank at all times. The bank only keeps a certain percentage of reserves, called required reserves, on hand at all times. The rest of the reserves are excess reserves that the bank can loan out to make money. Because banks no longer had excess reserves to loan out, banks started experiencing the depression also. Over one-third of banks in the United States during the Great Depression had failed. This seemed to cause a chain reaction to the overall scheme of things. Since banks were failing there was no one to lend manufacturer’s money for investments for growth, which also meant no money coming into the banks for excess reserves for financial investment. The life of Americans in the time of the Great Depression was hard and very difficult to keep things afloat. In many cases family had to neglect medical and dental care to save money during this difficult time. Many families had to take short cuts to get by and to have things to eat. Many family planted gardens, canned food, bought used bread, and used cardboard and cotton for shoe soles. Even the fact of the prices on some food dropped as quickly as they did, many
Sanford 3 families went without milk and or meat during the depression. In New York City, milk consumption failed by a million gallons a day. President Herbert Hoover said that none of the people during the depression were starving, but it turns out in New York there were 20 known cases of starvation, and not knowing how many there was that nobody even knew about. In 1934, there were 110 cases of death by hunger. The trouble of starvation got so bad in New York that West African nation sent…