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The Great Depression can be said to be one of the defining economic moments in America. The period witnessed a crash in stock markets. The economy of the company started crippling at a high rate. The depression began eight months after Hebert Clark Hoover was voted in as the thirty-first president of the United States. Overproduction of agricultural and manufactured items created a surplus in the economy. Consequently, the prices of products reduced to the point that producers could not sell. With surplus products in the market, it became challenging to increase sales. Alternatively, companies started laying off their employees. This measure was taken to decrease expenditure and utilize the little revenue (Smith 78).
Laying off employees further created a situation where customers had little or no disposable income. Families had to make wise spending on the little money they had. The times became harsh both for families and the business community. The majority of the citizens had saved their money in banks while the banks made investments in the stock market. As the value of money decreased, the demand for products also declined. As days went by, the country appeared to be falling into an economic abyss (Rosen, 86).
For the period between 1929 and 1940, the two presidents handled the great depression differently. Hoover believed that the economic state was temporary and was going to pass. In 1930, President Hoover declared that the depression was over which was far from the reality. Hoover practiced laissez-faire. He observed that the government could do nothing to salvage the situation. He believed that the only measure was to let the depression ran its course. As the economic situation became worse, experts advised Hoover to involve the federal government in fixing prices. He inclined to giving indirect aid to public works projects and the banks. Hoover refused to give direct funds to the citizens citing that it would...