Many factors contributed to the Great Depression. In America, the roaring twenties produced a false sense of prosperity, America had become the world’s bank that faced the crisis of defaulting loans, and, the failure of banks following the stock market crash each contributed to the great depression. The most damaging of these, in my opinion, was the American attitude that created a false sense of prosperity and caused behavior in individuals that had a significant impact on the economy.
During the 1920’s, the economy was reaching new heights and Americans were spending at excessive amounts. However, the spending was taking place on credit without any forethought of the future. Individuals were buying expensive items with money they did not actually have. Millions accumulated masses of debt, and just as many were investing in the stock market. Ultimately, consumer spending decreased and manufacturers faced overproduction, yet, at the same time, the stock market did not slow down. When the stock market crashed, masses amounts of people lost money and some nearly all their money. The stock market crash led to complete annihilation of the economy. Consumer spending halted, production ceased and factories closed, unemployment skyrocketed and those who remained at work faced a decrease in wages.
The type of boom that was seen in the 1920’s which led to the stock market crash and Great Depression has not existed in America in the last decade. Even if America were to face a boom of that nature, the nature of the government today and the creation of the banking systems put in place following the Great Depression would prevent a similar occurrence.
References
Wheelock, D. C. (2008). The Great Depression: An Overview. Retrieved from The Great Depression: https://www.stlouisfed.org/~/media/Files/PDFs/Great-Depression/the-great-depression-wheelock-overview.pdf
