Great Depression and the Presidents' Reaction
The Great Depression did not have its origins in the United States, even though its effects were deeply felt there. The major causes of the Great Depression were numerous and yet related. This paper will discuss these causes and show what Hoover and FDR did to respond to the Depression.
Major Causes
The major causes of the Great Depression stemmed from the outcome of WW1: war reparations were forced upon Germany, who could not repay them. Europe as a whole was in financial straits and could not afford to import the American products that Americans were used to exporting. Also, the same credit structure problems that afflicted America were an international affliction. Essentially, the banks were in control of the global money supply (thanks to the Federal Reserve Act of 1913 -- and the Great War that soon followed, which allowed American banks to "bailout" foreign governments with loans that they could never truly repay, turning states like Germany into debt colonies). The economic relationship and interdependency of the Western powers was wrecked as a result, and this wreckage was realized in the effects of the Great Depression, the beginning of which was seen in the market crash of Black Tuesday, October 29, 1929: those who had invested on "margin" now learned what a "margin call" was -- how badly it could hurt and how quickly they could lose everything to the big banks and their method of predatory lending. So while the Great Depression did not have its origins in the United States (the war and the Treaty of Versailles planted the seeds of economic woe along with the international banking houses), the advent of the Depression in America was "helped along" so to speak by the banking policies that had emerged in the U.S. And the stock market "bubble" that occurred between 1928 and 1929 when stocks rose by 40% thanks in large part to margin spending and Federal Reserve monetary policies like keeping interest rates low (same then as now),...
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