The stock market in the United States experienced a boom before the Great Depression occurred. During this boom, the Federal Reserve increased the interest rates severally. Several factors combined to result into the Great Depression, which left millions of Americans seeking employment within a very short period. The four major causes of the Great Depression include the stock market crash of 1929, bank failures, overproduction, and unemployment. President Hoover was in office during the occurrence of the great depression and he made several attempts to curb the situation as shall be discussed below.
On the Black Tuesday, October 29, 1929, the stock market of the United States experienced one of the greatest crashes in history. The previous interventions by the Federal Reserve to curb the overheated stock market and the United States economy such as raising the interest rates several times resulted into the crash. Investors tried to liquidate their shares to no reward thereby becoming bankrupt. Bank failures also led to the Great Depression. About 10,000 banks out of 25,000 disappeared. People withdrew money from their accounts. Banks could not meet their lending obligations to the clients. The exhausted deposits and unreturned loans made the banks to dishonor withdrawals as deposits were exhausted. The lack of insurance for deposits facilitated the bank failures. Factories and farms both fuelled the overproduction. The supply of factory produced goods in far outweighed the demand leading to surplus. Consequently, the prices of the factory produced goods reduced drastically. Nevertheless, the goods lacked market due to the unemployment rates. Farmers also overproduced wheat to meet their debts. The wheat depleted the nutrients soil making successive farming unproductive. Increased supply also led to similar circumstances as were experienced with the factory produced goods. Unemployment rates also increased to 65 percent including farmers and factory as well as bank employees.
Being in office during the occurrence of the Great Depression, President Hoover was blamed for his Republican policies he had succeeded from his previous administrators. He used procedural measures to curb the falling economy. His efforts include giving money to charity and encouraging other people to do the same, doing away with the taxes his previous administrators had put on the citizens, and increasing government expenditure on public infrastructure.
Reference List:
Caldwell, JeanO'Driscoll, Timothy G. 2007. "What Caused the Great Depression?." Social Education 71, no. 2: 70-74. Professional Development Collection, EBSCOhost (accessed May 27, 2014).
Rose, Peter. 2010. "Getting to Know Herbert Hoover, Enigmatic Humanitarian." Society 47, no. 6: 529. MAS Ultra - School Edition, EBSCOhost (accessed May 27, 2014).
