To what extent was the weakness of the US banking system the main reason for causing the Great American Depression of the 1930s?
The American depression was undoubtedly one of the worst times that people of not only America but the world had to suffer through. In 1929, the Wall Street Crash plunged the USA into economic depression bringing with it poverty and hunger. The depression negatively affected countries all over the world for years. It has been argued that it was the US banking system to blame however, the cycle of prosperity, the Government’s attitude along with many others had a part to play in causing the US depression.
The cycle of prosperity impacted the American depression as it led to a consumer boom which gave people a false idea of just how safe the American economy was. It was also the reason why unstable businesses and systems were created such as hire purchase.
Prior to the depression, the USA was one of the most prosperous countries in the world. Thanks to the First World War there was a higher demand for American goods which led to a boom in the economy and by the early 1920s, the American Industry had virtually doubled! With more jobs available and better wages being offered people could afford to spend more money and have fun doing so! America found itself in a cycle: With people spending more, industries were making more products and more jobs were becoming available as the days went on. This cycle was known as the cycle of prosperity. One of the main advances during the roaring twenties was Henry Ford’s Motor Company. His Ford factory in Detroit was one of the largest factories in the world. As people could now afford to buy cars due to the mass production of cars his business was more popular than ever and created a lot of jobs for people but also a lot of money! The mass production meant that more standardised parts were needed which led to an increase in jobs in the steel, iron and many other industries and to a consumer boom!...