The Federal Reserve Caused the Great Depression

The burden of proof in the round is to prove that the Federal Reserve is the cause of the Great Depression. If I can prove it wasn't the cause, or it had another cause, the burden of proof cannot be upheld and the round is negated. Thus, my constructive speech will be focused on the point that there were too many reasons that the Great Depression happened for the Federal Reserve to be wholly blamed Contention 1: Bank Failure Subpoint A: investments Although the Federal Reserve is the "head bank", in a sense, the most impactful bank failures were on the local level. Unlike today, where governments have legislation dictating what they can and can't do with our money, banks in the 1920s had next to no restrictions. As a result, many banks invested their client's money without consent into the stock market [1], tying them up in other investents. When the stock market crashed (as well as the Banks' investments), and people rushed to withdraw their money, they unfortunately learned that all of their money was gone because it was invested in a system that had failed. Can you imagine that? All of the money you invested over your life time, just gone without you ever being able to use your nest egg. With so many people left without money, no one was able to invest. Without investors (after the crash barely anyone still trusted banks), and without the money they invested in the stock market, banks just started going out of business. In total, 9,000 banks failed [2] completely, with many more struggling to survive, so the economy had even less banks that could pump money into the economy, and those that did survive didn't have enough money to give out many loans. Because the Great Depression was caused by individual bank failures, the resolution is negated. Subpoint B: Lies SpB is fairly simple. When the stock market did begin to fail, starting with the mini-crash on March 25, 1929, there was a mini panic. Unfortunately, instead of slowing down the investments in the stock markets, influential leaders of privately owned banks, such as Charles Mitchell, lied to the public and stated that the economy was fine and loans wouldn't be impacted. As a result, " [it] was followed closely by reduced steel production and a slowing down of car sales and new home construction. June through August saw the stock market hit its highest peak." [1], so while the stock market and the private sector were beginning to fail, the lies introduced by individual banks were causing investments in these failing businesses to rise to never before seen heights, leading to a more profound recession which eventually became the Great Depression. Because misleading information from Bank leaders caused more investments in a failing economy, the resolution is negated. Contention 2: Business Failures Another reason why the Great Depression was caused was because of errors made in individual businesses. Subpoint A: investments Throughout the 1920s, many invested in the stock market, and business owners were no exception. Not only did they invest money like everybody else, but they also invested capital in the stock market [1]. this capital was then reposessed by the banks in an attempt to cover the loan, so not only did banks lose money, they lost their own property (which due to bank failure they were not able to afford to buy back). Subpoint B: International trade. Declines in international trade also helped turn the intial recession into a full-blown depression. "Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression ... Most historians and economists partly blame the American Smoot-Hawley Tariff Act (enacted June 17, 1930) for worsening the depression by seriously reducing international trade and causing retaliatory tariffs in other countries." [3]. A decline in international trade kept some businesses from getting back on their feet because other countries were unable to trade with us, both because of the depression going on with their own countries, and the retalatory tariffs in response to the Smoot-Hawley tariff, which would make international trade unprofitable. Contention 3: Stock Market Failure Subpoint A: Stock Market Failure My SpA is simply an explanation of the third contention. Although the Federal Reserve did in part contribute to the crash due to their misleading interest rates, they were not the sole reason. Just like with the depression as a whole, the Federal Reserve was not the whole reason for the stock market crash. Subppoint B: Inaccurate Stock A main reason that the crash was so harsh on the investors was the fact that the stock they invested in was not actually worth the price they paid. When investing in the stock market, the price of the stock is worth the highest amount of money paid for that stock. [4] This would mean that people were simply paying for the amount that some idiot who wanted pay high and buy everybody our for, not how much the actual stock was worth, so you had cases where people were investing large amounts of money that didn't represent how well the business was actually doing. To make this problem worse, investors such as Richard Whitney would pay generous amounts for stocks in order to convince investors that the banks still had faith in the stock market [5] and keep the investors lined up. This attempt to keep money flowing led to even more investments in worthless stock, which made the consumer actually continue to pay for failing companies rather than let them die out, as is capitalism's way. In conclusion, the reason Federal Reserve cannot be considered the cause of the Great Depression is because it is not the sole reason the Great Depression occured, or even the sole reason the stock market crash lead to a depression. I have personally provided 3 arguments with 2 reasons per argument, so there are at least 6 other causes for the Great Depression (hopefully I won't have to cite basic math as this isn't a Hez debate:P) Because the resolution cannot be considered true, vote Con. On a more personal note, it's clear that my opponnent is also a history buff, so I'm looking forward to rebuttals :) Works Cited: 1.) http://www.archives.com... 2.) http://www.livinghistoryfarm.org... 3.) http://en.wikipedia.org... 4.) http://www.gophslions.com... (specifically it's either chapter 23 or 22, I'm not sure) 5.) http://www.snopes.com...