What Caused The Economic Changes In The Late 1920's

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Many factors caused the economic condition in America to change in the late 1920’s resulting in the Great Depression. These factors include World War One, individual debt, business failure, farming decline, banking failure, and the stock market crash. World Depression was caused by World War one because the demand for American products reduced after the war resulting in too much supply with limited demand. Production was lowered and jobs had to be cut, leaving many without jobs leaving many in debt because many people took out loans or stocks during the war. Many people did not have money to spend in businesses and businesses also took out loans that needed to be paid back. However, without business they were not making any money resulting in business failure. This also hurt the economy. After the war the price of grain dropped and farmers…show more content…
Both FDR and Hoover because of their political differences handled the depression in a different way. President Hoover believed in a small government, and laissez faire to not get involved in businesses. He was sure that the depression would pass, is normal and will fix itself. Relief would be provided through the people and charities. Hoover’s economic philosophy was restrictive monetary policy and free market. Restrictive monetary policy is limiting currency to prevent inflation. In other words, not putting money into circulation or giving out loans to protect the value of the dollar. If not many people have money the value of the dollar goes up. Care for yourself and don’t depend on the government was his belief. The market controls the free market including production, price, supply, and demand. Hoover thought the depression would fix itself and that it did not require allot of government regulation. While Hoover handled it that way FDR handled the economy
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