The Great Depression
When World War I ended in 1918 the United States and the world were expecting a peaceful and bright future ahead of them!. In the beginning everything seemed to live to their expectations!. Factories were producing; people were hired and content with their jobs and wages, and were spending money which was good to their economy!. Many people invested on stocks and some even became rich!. Little did they know what that everything they had might disappear in a few years!.
Everything began when the stock market crashed!. Due to this unexpected change in the economy many people started to reduce their spendings, causing a snow ball effect on the world’s economy!. Business closed, wages and prices fell, but people had no money!. People lost their homes and would work for food, starvation, poor health left people miserable!. This abrupt change in people’s lives left them not knowing what hit them!.
On October 26, 1929 the New York stock market collapsed!. People over invested and bought stocks with borrowed money from their broker only ten percent down, confident that they would become rich and be able to pay them back!. When stocks prices got to a very high price, other investors would not buy them, and the owner of these stocks had to lower their prices!. The prices fell heavily and people found themselves with no money to pay their stock broker!. Due to the stock market crash many people lost their fortune and would not invest in stocks at all!. Prices went down but no one could buy them because they had no money!.
Most of the U!.S wealth was on the hands of the wealthy!. During this tumultuous time in world economy, these people did not spend much!. When they did spend some of their fortunes it would be to buy goods from places where it did not affect the United States economy much!. With fewer people buying goods, factories and businesses had to close down, causing their workers to save the money they had, causing millions of other to lose their job!.
As one of the response to the sudden depression, countries raised their protective tariffs to “protect” their industries from failing!. Tariffs are like tax that important goods have to go through to get to their destination!. In the U!.S the prices of these important goods were lower than the prices of the merchandise that were produced in the U!.S!. Because of the lower prices people bought imported things instead of the goods that were made in the U!.S causing these factories to suffer greatly!. The government observing the raised the tariffs on imported goods caused other countries to raise tariffs on their imported merchandise also, so these countries had a hard time selling their goods abroad!.
With no money people stated to get loan from banks; perhaps confident that this hard time would end soon!. Contradicting their thoughts things got worst and they had no money to pay back their loans!. Meanwhile the depression made people suspicious about their banks that held their money!. Immediately they wanted to take their money from banks, but the banks had no money since they loaned the money they had to other people; this caused lots of banks to go bankrupt!.
During this time people started to avoid paper money, since they believed that they held no value, and was just paper!. The government then invented something called the Gold Standard; a mark on a money bills that allowed people to exchange they bills to get real gold or silver!. This caused little money to be in circulation, and the U!.S!. treasury was starting to get short on gold!. When things were good people bought things on credit promising to pay a monthly value to the companies!. But in the late 1920s and early 1930s they had no money to pay and causing this business to close their doors!.
All this caused the snow ball effect on the whole world!. Once people were fired they reduced their spending, which forced other business to lay off, until many people were out of work!. The only way to get the economy back on track, was for people start spending; that was hard since no one had the money to spend it!.
Our new president Franklin D!. Roosevelt promises a New Deal to his American people!. One of his many plans, Roosevelt plans to hire man to do public work, hire young man to work in the forest to build trails, plant trees and fire towers, help farmers, and put older man to work in cities!. The American people only hope that these great ideas will take them out of this great depression that only seems to get worst!. They believe in him, they believe and need change!.
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