What Caused The American Depression?

By 1928 the world economy was slowing down. There were growing stockpiles of raw materials across the globe. In the USA mass production techniques had led to over-production of consumer durables. Unsold goods were piling up in factories, warehouses and shops. People, although paid more than in 1920, could not afford to buy everything that was being produced. It meant that the country was overproducing but at the same time there was under consumption.

Most people had used up their credit and couldn't buy any more goods. High import tariffs had resulted in other countries putting tariffs on American goods. They couldn't buy the USA's surplus products.

Farmers too had been over-producing, which meant low prices and profits, evictions and banks being put under pressure. All this eventually led to a loss of confidence in 1929 and share prices collapsed in October with the Wall Street crash in New York.

Add Comment

Report