The Stock Market Crash of 1929
A major contributing factor to the great depression was the stock market crash of 1929. The stock market crash itself can be viewed as a result of the false prosperity that surrounded the 1920's. Throughout much of the twenties the stock market appeared to be doing vey well and as a result grew to be a vital asset to the American economy. However the success of the market in the 1920's was in large part due to the overvaluation of many companies listed on it. When this was realized it led investor confidence to drop significantly. Another issue with the stock market at the time was that not enough Americans were investing their earnings in it. This was partially because many people had no saving at all due to them spending all their money on products they couldn't afford. In fact only 1.5 of the 120 million Americans at the time were investors. Also, as a result of the reduced government role in the economy there was not a lot of regulations. Together these flaws created the perfect storm for a complete failure of the stock market. When this failure occurred investors were not the only people hurt. Many of the banks that had money invested suffered from the crash significantly also. This along with people making huge amounts of withdrawals, led to bank failures which caused people who didn't even have any money invested to lose all of their savings. After the crash it was apparent to all Americans that the economy was no longer an invincible juggernaut. This realization caused people to stop spending money which only made matter worse. The decreased role of government is quite obvious in the aftermath of the crash. Perhaps the effect of the crash could've been eased if the government had stepped in to do something. However as a result of Hoover's philosophy the government stayed uninvolved in the fiasco for years. Had this occurred during the progressive era the government may have implemented regulations in order to prevent the economy from continuing to decline after the crash. Eventually President Hoover did step in, but these were only last ditch efforts that mostly ended in failure. One example of this is that Hoover went through a lot of trouble to keep wages up, which actually did not help the economic situation at all. Another last ditch effort was to drastically increase tariffs on foreign goods, which only hurt the economy more. By the end of Hoover's presidency Americans had lost 140 billion dollars. And it was clear that the inaction of the government was not successful.
This video talks in depth about the factors which ultimately led to the great depression. It talks about how the stock market crash caused people to lose billions of dollars and led to widespread panic. It talks about how bank failures caused people to lose even more money and how consumer spending slowed down as a result. It also discusses tariffs, one of the government's most notorious efforts to save the economy. Finally it closes by touching on some of the natural causes of the depression which can not be blamed on anyone. Overall, this video highlights many key points that were previously discussed and adds more to them.