The Great Depression between 1929 to 1933 Essay

The Great Depression between 1929 to 1933 - Essay Example Banks in the early 1930s had insufficient funds that would not match with the increased savings take-out that took place during the autumn of 1929. In spite of the banks being many, their small nature did not allow them to insure the bank deposits. The result is that the failure of the banks translated to people losing their savings. The few banks that survived had to pay much emphasis on their survival due to the prevailing conditions at that time and hence they deterred from loans creating. This measure worsened the situation by resulting to less expenditure. In response to the stock market crash, people ceased from purchasing items. Intrinsically, the number of items produced had to reduce and a decline in the number of people needed to produce the goods. The workers affected had to lose their items that they used installment plans to purchase. The selling firms reposes the items and a large amount of inventory was accumulated. With the unemployment rate rising above twenty-five p ercent, a worse situation was anticipate, a further less expenditure to palliate the situation of the economy. Goods remained unsold and more and more workers were laid off, extending the GD. The Federal government, in its effort to protect businesses and companies in the U.S., established a Smoot-Hawley tariff. This 1930 tariff had the effect of economic revenge over the lessened trade between the U.S and other foreign states. The European countries had also borrowed a lot of money from America.