The causes of the Great Depression were numerous, and after the stock market crash of , a number of complex factors helped to create the conditions necessary for the longest and deepest economic downturn in modern history. President Franklin D. In a gold standard system, a given amount of paper money can be converted into a fixed amount of gold. From the late s until the s, most countries in the world—including the United States—adhered to an international gold standard.
What Caused the Stock Market Crash of 1929?
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Direct federal relief to the unemployed ran counter to President Herbert Hoover's strong beliefs about the limited role of government. As a result, he responded to the economic crisis with a goal of getting people back to work rather than directly granting relief. In October , he established the President's Emergency Committee for Employment later renamed the President's Organization for Unemployment Relief to coordinate the efforts of local welfare agencies. As the Great Depression worsened, however, charitable organizations were simply overwhelmed by the magnitude of the problem, and Hoover tried new ideas to stimulate the economy:. Despite Hoover's efforts to revitalize the economy, the public blamed him for the Great Depression — and the Republicans lost control of both Congress and the White House for almost two decades.
The 1929 Stock Market Crash
Lasting almost 10 years from late until about and affecting nearly every country in the world, it was marked by steep declines in industrial production and in prices deflation , mass unemployment , banking panics , and sharp increases in rates of poverty and homelessness. In the United States, where the effects of the depression were generally worst, between and industrial production fell nearly 47 percent, gross domestic product GDP declined by 30 percent, and unemployment reached more than 20 percent. By comparison, during the Great Recession of —09, the second largest economic downturn in U. There is no consensus among economists and historians regarding the exact causes of the Great Depression.
The stock market crash was a result of an unsustainable boom in share prices in the preceding years. The boom in share prices was caused by the irrational exuberance of investors, buying shares on the margin, and over-confidence in the sustainability of economic growth. In the s, there was a rapid growth in bank credit and loans in the US.