Great Depression

Essay by babycatmeCollege, Undergraduate August 2004

download word file, 5 pages 4.7

During 1929, the United States was experienced the Great Depression. It was the worst economic decline ever in U.S. history. By the end of the year, unemployment rising, business closing its doors, and poverty on a rise in the United States. President Herbert Hoover tried to fight the Great Depression, but didn't make much difference. Many fearful citizens wanted a leader who would do more to lighten the crisis. They found that leader in Franklin D. Roosevelt, who promised the nation a "New Deal" and with that promise won the election of 1932. Roosevelt's New Deal had deep effects upon American history. Franklin D. Roosevelt solved the depression and got the economy rolling again.

The depression was caused by a number of serious weaknesses in the economy. The first cause was Easy Credit. Although the American economy prospers in the 1920s, most of this richness was based on easy credit.

The Federal Reserve Bank kept low interest rates, making it easy for businesses and individuals to borrow loans. This policy encouraged people to go into debt. Many people bought new homes, cars, and appliances on installment plans. Instead of paying the full price of an item at the one time. They just made a small down payment and then paid monthly installments over a set period of time. As long as people could buy on credit, factories kept busy and jobs were plentiful.

The second cause was Risky investments. Some investors expert speculation, ignoring the true value of stocks, they tried to buy stock while it was going up and then sell it at higher price. They believed that they could always sell at a higher price, speculators bought and traded stocks above their actual value. Some people speculated on borrowed money, betting that the stock market would continue to...