America's Economic Collapse: The Great Depression Era

The Great Depression: Causes, Crash, and Recovery

Causes of the Great Depression

After World War I, the USA emerged as the world's leading economic power. However, underlying issues soon led to a severe economic downturn.

The Roaring Twenties

This period was characterized by significant economic prosperity in the USA, marked by:

• Consumerism: A burgeoning consumer society with widespread adoption of household appliances, automobiles, and new fashion trends.
• Urban Growth: Rapid expansion of cities, symbolized by the construction of skyscrapers.
• Modern Culture: The rise of cinema, the Jazz Age, Swing dance, Art Deco, and evolving fashion.

Stock Market Bubble

Fueled by rising consumption, workers began buying on credit. Businessmen borrowed heavily from banks to invest in stocks, engaging in speculation to earn quick profits. Eventually, many individuals and businesses lacked the funds to repay their debts or purchase new goods, creating an unsustainable bubble.

Crisis of Overproduction

The economy produced more goods than people could consume. Consequently, prices plummeted, leading to widespread bankruptcies among farmers and companies.

The Wall Street Crash of 1929

Black Thursday

On October 24, 1929, the stock market experienced a significant loss, and prices fell sharply. Panic quickly spread among investors.

Black Tuesday

On October 29, 1929, prices continued their steep decline. A staggering 16 million stocks were put up for sale by desperate investors trying to minimize their losses, but there were no buyers. By the end of the day, the market had lost an estimated $30 billion.

Impact of the Depression

The aftermath of the stock market crash was devastating:

• Banks, companies, and investors faced widespread bankruptcy, losing all their invested capital.
• Consumption plummeted, and unemployment and poverty soared across the entire country.
• International trade halted, and the crisis rapidly spread to Europe and other parts of the world.

The New Deal

In 1933, Franklin D. Roosevelt became the new president of the USA. He introduced a comprehensive program known as the New Deal, comprising various projects and plans designed to provide relief for suffering citizens and stabilize the economy.

Economic Reforms

Key economic initiatives included:

• Establishing state-owned companies.
• Providing assistance to and implementing stricter controls over banks to prevent future crises.

Social Reforms

Social programs focused on:

• Investing in public works to reduce unemployment through the Works Progress Administration (WPA), which also aided impoverished individuals and provided job training.

New Deal Effects

These reforms led to a rise in consumption and stimulated the American economy. However, the USA did not fully overcome the crisis until after World War II.