Running head: THE GREAT DEPRESSION OF THE 1920’S
The great depression of the 1920’s
Maria S. Fuentes
Harrisburg University
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THE GREAT DEPRESSION OF THE 1920’S
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Page One for Composition Class
The great depression is the lowest economic decline to transpire in the industrialized
world. The great depression occurred in the united states in 1929 and ended in 1939. It was a
very devastating event for many families, leaving many wondering if they were going to have
enough to feed their families every day. The economy was so bad to the point where there was a
lot of uncertainty. Stocks were out of control and unemployment rose; Banks went out of
business and trade wasn’t doing too well. The government tried to fix the economy but failed to
do so.
One thing that occurred because of the great depression was unemployment. According
to Amadeo (2020) “It peaked in 1933, reaching up to around 25%. Almost 15 million people
were out of work. That's the highest unemployment rate ever recorded in America.”
Unemployment occurred because as spending decreased and demand for goods fell during the
great depression, many firms and companies couldn't afford to pay so many workers. As a result,
many workers were laid off. Moreover, some companies completely shut down, leaving
everyone who worked there unemployed. When shares fell it caused lots of people to lose
money, causing them to stop buying goods, ultimately leading to businesses going out of
business and workers being laid off. Unemployment was devastating for many families because
it caused a lot of uncertainty. Families wondered if they were still going to have a roof over their
heads or food on the table.
Another devastating effect of the great depression was the stock market crash. Lots of
people were earning well and had enough extra money to spend. Because of this people decide to
invest their money on stocks. According to Britannica “Stock prices decline. The market goes
into a free fall, and a wild rush to sell stocks begins.” Everyone goes crazy buying stocks and
THE GREAT DEPRESSION OF THE 1920’S
when the stock prices decline people decide to start selling their stocks. Since so many people
were selling their stocks the value of shares drastically declined. Lots of people lost money
during this process. This loss of money led to other more severe problems.
Another result of the great depression was a failure of banks. According to Amadeo
(2020) “People were stunned to find out that banks had used their deposits to invest in the stock
market. They rushed to take their money out before it was too late. These “runs” forced even
good banks out of business.” Banks became untrustworthy the moment they began using the
people’s money to invest in stocks. People were quick to take action and withdraw their money
before anything happened with it. This impulsive action caused many banks to go out of
business. This whole event just caused the economy to worsen during the great depression.
Lastly, another major effect of the great depression was trade. Due to the high
unemployment percentage the governments plan to boost the economy was to raise taxes on
imports. Little (2018) states “The thinking among Congress and President Herbert Hoover was
that by raising taxes on thousands of imports no matter what country they came from, the act
would protect American farmers and secure the nation’s economy… After President Hoover
signed the bill into law, stocks dropped to 140.” The government’s plan was to raise taxes on
imports so that American industries could benefit. The government passed the Smoot-Hawley
Tariff Act in June of 1930 which raised taxes on imports by 20% According to Britannica “ By
raising the average tariff by some 20 percent, it also prompted retaliation from foreign
governments, and many overseas banks began to fail.” The government thought that this would
be an efficient way to improve the economy but all it did was cause a trade war. Not only did it
end up hurting the US economy by causing stocks to drop again, but it also hurt the world
economy. Other countries were not pleased with the United States actions and decided to
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retaliate. They ended up setting their own restrictions on international trade and it only made the
depression in the united states worse. People could no longer afford imports; consequently they
had to buy domestic products. The Smoot-Hawley Tariff Act only worsened the depression in
the us, and in other countries as well.
In conclusion the great depression had many effects. The main consequence of the great
depression was the fall of the economy. The stock market collapsed and unemployment rose.
People were also skeptical about what the banks were doing with their money and in an attempt
to save the economy during the great depression the government passed an act that raised taxes
on imports which destroyed the economy even more. The great depression affected the economy
worse than any other time.
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References
Amadeo, K. A. (2020, July 29). How the Lows of the Great Depression Still Affect Us Today.
The Balance. https://www.thebalance.com/effects-of-the-great-depression-4049299
Great Depression: Timeline. (n.d.). Encyclopedia Britannica.
https://www.britannica.com/summary/Great-Depression-Timeline
Little, B. (2018, September 20). The Great Depression Lesson About ‘Trade Wars.’ HISTORY.
https://www.history.com/news/trade-war-great-depression-trump-smoot-hawley
Pettinger, T. (2020, April 1). Unemployment during the great depression. Economics Help.
https://www.economicshelp.org/blog/162985/economics/unemployment-during-thegreat-depression/
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