**Title: The Causes and Impact of the 1929 Great Depression Explained**
**Description:**
Welcome to our video where we delve into the history and causes of the 1929 Great Depression. Join us as we explore the political, economic, and social factors that led to this historic event and discover how it affected American society. Whether you’re a student or simply curious, this video provides an in-depth understanding of the 1929 Great Depression and why it remains such a significant period in history.
**Keywords/Tags:**
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**Full Transcript:**
The United States has experienced several economic depressions throughout its long history, with one of the most notable being the Great Depression of 1929. Lasting for over a decade, this economic downturn severely impacted all sectors of the U.S. economy, making it the longest recession the country has ever faced[^1^].
The Great Depression began in 1929 with the crash of the New York stock market and persisted until 1941, resulting from a combination of economic issues and unfortunate circumstances that had a profound effect on the global economy[^1^]. In this video, we will discuss the causes behind the 1929 Great Depression and examine its far-reaching impact on American society. Make sure to hit the Subscribe button and smash the Bell icon for more exciting updates!
Before the Great Depression, the U.S. economy experienced a brief but significant depression between 1920 and 1921, colloquially known as the “Forgotten Depression”[^2^]. During this period, the U.S. stock market crashed by 50%, and corporate profits plummeted by 90% compared to previous years[^2^]. However, the following decade saw continuous economic growth, earning the nickname “Roaring Twenties” due to the sudden economic boost[^2^].
Between 1921 and 1929, the United States’ gross national product grew at an average annual rate of 4.7%, and unemployment rates dropped from 6.7% to 3.2%[^2^]. This period showcased clear economic improvement, leading to increased public investment in the stock market. Unfortunately, these investments took a speculative approach rather than being grounded in market fundamentals[^2^]. Financial institutions were willing to provide loans to individuals seeking more and more money for their investments, contributing to the rise of risky behavior in the stock market[^2^]. Furthermore, the lack of proper regulations in the stock market fueled unnecessary speculation.
However, the Autumn of 1929 marked the end of this era as investors sought to capitalize on inflated prices. This led to a series of panic selling, resulting in the stock market crash of October 1929[^2^]. Over the next three years, the stock market lost more than 85% of its value, a significant factor that triggered the Great Depression which began in 1929[^2^]. The crash wiped out countless investors who had experienced success during the Roaring Twenties.
During the tumultuous 1929-1932 period, people increasingly relied on credit to purchase stocks instead of using real money[^2^]. When banks demanded repayment, individuals lacked the funds to comply, plunging banks into a crisis as they struggled to pay back depositors who wanted to withdraw their money[^2^]. This led to the collapse of numerous small banks, erasing the savings of millions of Americans who were already facing high unemployment[^2^].
The sudden stock market crash had severe consequences for American companies. Prior to the crash, companies were expanding their production capacity to meet the high demand driven by the economic boom. However, the crash drastically reduced the demand for agricultural and industrial products, causing heavy losses for many companies[^2^]. In response, these companies had to reduce their workforce, leading to widespread job losses that pushed the country into severe unemployment. The unemployment rate skyrocketed from a healthy 3-5% at the start of the stock market crash to a peak value of 24.9% in 1933[^2^].
The Federal Reserve, established in 1913, had limited experience managing the supply of money and credit both before and after the 1929 crash[^2^]. Their intervention to solve the Great Depression proved ineffective, and some of their policies even worsened the situation. For example, keeping interest rates low in the mid-1920s contributed to an expansionary period, but afterwards, the Federal Reserve disregarded economists’ advice and doubled interest rates in 1931, aiming to discourage lending and borrowing[^2^]. Additionally, the Federal Reserve followed a “liquidationist” policy, allowing troubled banks to collapse rather than supporting them to restore stability[^2^]. This led to the failure of around 11,000 small banks, devastating the savings of millions of Americans who were already grappling with unemployment[^2^].
Herbert Hoover, the President of the United States when the stock market crashed in 1929, initially believed in “rugged individualism” and favored limited government intervention in economic problems[^2^]. However, as the crisis worsened, Hoover began lending assistance and supported funding for public works projects[^2^]. Many economists argue that these measures were insufficient and enacted too late to significantly impact the crisis. In 1933, Franklin D. Roosevelt took office as President and introduced an array of programs and projects known as the New Deal[^2^]. The main goals of the New Deal were to provide relief to jobless Americans, establish safety net programs, regulate the private sector, and reshape the role of government[^2^]. Under the New Deal legislation, the Glass-Steagall Act separated commercial banks from investment banks to prevent conflicts of interest and speculative practices that had led to the 1929 crash[^2^]. Additionally, the FDIC insurance scheme was introduced to protect consumer accounts and oversee the banking system[^2^]. These policies took time to yield tangible effects.
It is clear that a lack of proper regulations and oversight played a significant role in causing the Great Depression[^2^]. However, steps were taken to rectify these issues, with the establishment of the Securities and Exchange Commission to oversee the stock market and enact necessary legislation, protecting investors from fraudulent practices[^2^].
As we conclude our exploration of the 1929 Great Depression, it becomes evident that this era remains a crucial turning point in American and global economic history. By understanding the causes and lasting impact of this devastating period, we can better comprehend the importance of proper regulations, responsible investing, and effective government intervention.
**Sources:**
[^1^]: [History.com – The Great Depression](https://www.history.com/topics/great-depression)
[^2^]: [Investopedia – The Causes and Effects of the 1929 Stock Market Crash](https://www.investopedia.com/investing/stock-market-crash-1929-causes-effects-and-facts/)
In this video, we’re going to take a look at the 1929 Great Depression and learn what caused it. We’ll explore the political, economic, and social factors that led to the Depression, and we’ll see how it affected American life.
Whether you’re a student or a civilian, this video is a great way to learn about the 1929 Great Depression and its effects on American society. By the end of this video, you’ll have a much better understanding of what happened and why it was such a big deal!
This can never happen again because we have tents.