What were the domestic and foreign causes of the Great Depression? How did President Hoover respond to the economic emergency
.The great depression happened between 1929-1939, and it was the deep-rooted economic downfall in the history of America. The Great Depression was not caused by one factor but rather by a combination of both domestic and foreign conditions. The effects of the Great Depression was felt across the world as it leads to many events taking place in different countries across the globe .it also affected the American economy in a significant way.
The stock market crash in 1929 saw the begging of the great depression. The collision made the investors to panic, and they could not invest in the stock anymore. This saw a decrease in customer spending and investing and brought a high level of unemployment as many companies laid off their workers. Investors lost a lot of money during the crash. This was one of the major causes of the great depression.
The collapsing of banks contributed to the great depression. Many banks failed due to the economic crisis brought about by the stock market crash. When the banks started failing, people panicked and lost their money as they had not insured it, and this caused panic, and many customers withdrew their money from the bank causing many of them to close. The surviving banks were not willing to lend money, and this led to people start reducing their spending.
The reduction of purchasing was another contributing factor to the great depression. After the stock market crash and many people losing money in the bank collapse, consumers stopped purchasing goods and services. This saw a reduction in the production of goods. As many people had lost their work, others lost money, and so they could not afford most items. The unemployment level was very high, and this meant that people could not spend much, it became hard to build the economy once again.
The environmental destruction contributed to the great depression. The one-year drought that occurred in 1930 in the Mississippi valley, “The dust bowl” made people becomes so desperate that they could not afford to pay taxes or any debt that they had.
The American economic policy with Europe was the foreign factors that lead to the great depression. When businesses started failing, the government made an initiative to protect the American companies against foreign competitors, and this saw the creation of the smooth-Hawley tariff in 1930. The tariff charged a very high tax for the imports, and it led to less business between America and te foreign countries
How did President Hoover respond to the economic emergency?
The Great Depression is known as an economic emergency, and it needs very fast handling of the situation was getting worse each day. President Hoover took the initiative to work toward improving the economy. Hoover response to the stock market crash asked his citizens to “Tighten their belt and work hard” (Henretta,2016)to help in making the economy better. He requested the business community to help in sustaining the economy by not laying off their employers who will help in the production of goods, and they will also have money to pay off their debts and taxes which will help to boost the economy.
He hopes that the American citizens would volunteer to work and that they will spend money buying goods to help in boosting the economy.
President Hoover took the initiative to improve the economy by giving jobs to unemployed workers. He improved the prices of the crops that the farmers had planted and he also gave loans to the banks that had failed so that they could be able to be in business again.
President Hoover responded to the economic emergency by also requesting the banks that survived the Great Depression to state giving loans to those that needed it. He assured them that all would be well and they will not collapse.
References
Henretta, James A. America: A Concise History, Volume 2, 6th Edition. Bedford/St. Martin’s, 9/2016. VitalBook file