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A family, poverty stricken by the Great
Depression, stands outside their NVA Project home in Carson City, Nevada
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Prior to the Great Depression, this nation's leaders, in general, did not intervene in the running of, or issues associated with, business. In fact, prior to Franklin Delano Roosevelt's administration, the United States' government operated according to laissez-faire economics. Laissez-faire economics, by definition, does not allow for federal intervention in the affairs of business. Laissez-faire economists believe that a national economy is self-regulating - that competition itself will regulate sales, prices, and therefore balance the economy. This 'invisible hand' of the economy is the basis of the laissez-faire theory.
Herbert Hoover, the President as the Great Depression unfolded, was a laissez-faire economist. It was his belief that it was not the place of the government to interfere in business transactions. President Hoover was hesitant to intervene, despite the American economy's cries for action.
President Herbert Hoover is sometimes said to have been the cause of the Great Depression. His indecision and lack of action has earned him the role of scapegoat for the Great Depression. However, a close look a history, and the American situation at the time of the Depression would prove that, despite popular belief at the time, President Hoover did not cause the Great Depression.
Furthermore, despite what one may assume, the Stock Market Crash of 1929 was not a cause of the Great Depression. In fact, history tells us a very different story. The Stock Market Crash of 1929 did not cause the Depression, but instead the Crash was caused by the Great Depression.
The true causes of the Great Depression were tucked neatly into the folds of America's greatly unstable economic structure. The unequal distribution of wealth and corporate power, and poor banking structure were at the heart of the causes of the Great Depression. Furthermore, unbalanced foreign economies, and American beliefs about their own economy led to the ultimate failure of the economic chassis. These flaws in the economic system, sitting passively in the shadows, were the cause of what has become America's darkest economic hour.
Unequal Distribution of Wealth
Unequal Distribution of Corporate Power
Poorly Structured Banking
Foreign Balance of Payments
American Economic Beliefs