There were many causes for the Depression; unequal distribution of money during the 1920’s was the main cause of the Depression. This unequal distribution happened on many different classes of people. The imbalance of money is what created such an unstable economy. The stock market was doing much worse than people thought during this period. This lead to the biggest stock market crash in our history.
The Great Depression reeked havoc on the stock market, banking, industries, and agriculture that led to massive unemployment, breadlines and fear that lasted over a decade. After the stock market collapse, the New York banks became frightened and called in their loans to Germany and Austria. However, without the American money, Germans had to stop paying reparations to France and Britain. This was a chain reaction and they could not repay their war loans to America, therefore, the depression had spread to Europe. The U.S. Government tried to protect domestic industries form foreign competition by imposing the Hanley-Smoot Tariff of 1930.
Franklin Roosevelt said, “When you come to the end of your rope, tie a knot and hang on,” and it directly relates to the Great Depression. People thought that because of this huge downturn that they would not survive but they had to “tie a knot in their rope,” and continue to try and survive. The great depression was a time of horror and failure. The giant Stock Market crashes of the 1930’s triggered this major blow to the nations economy. This major devastation also leads many families into terrible poverty.
On the following Tuesday the stock market fell and the market was not able to get back up. This day is forever known as “Black Tuesday,” and the official start of the Great Depression. The speculation and the resulting stock market crash acted as the trigger for the already unstable United States economy. Due to the maldistribution of wealth and the unstable economy of the 1920’s, the nation headed into a decade of trouble. In response to its economic difficulties, the United States set up even higher trade barriers with other nations, causing more trouble within the nation.
Stock Market Crashes, Bank Failures and a lot more, left the governments ineffective and this lead the global economy to what we call today- ‘’Great Depression’’.(Rockoff). As for the cause and what lead to Great Depression, the issue is still in debate among eminent economists, but the crux provides evidence that the worst ever depression ever expereinced by Global Economy stemed from multiple causes which are as follows: Stock Market Crash: Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA.
In addition to North America, the Depression greatly affected Europe and other various countries throughout the world significantly during the 1920’s and 1930’s. The Great Depression was caused by the collapse of the Stock Market, which happened in October of 1929. The crash exhausted about forty percent of the paper values of common stocks. It was the worst depression due to the fact that at the time of the Great Depression the government involvement in the economy was higher than it had ever been. A unique government agency had been set up exclusively to prevent depressions and their related troubles for instance bank panics.
The Great Depression, which lasted from 1929 to 1939, was a landmark decade that entailed famine, increased suicide rates, and financial shrinkage internationally. Being that the stock market was comprised of international stock, when the crash of October 1929, major banks failed worldwide, causing several countries to suffer from trading losses due to the relationship with the United States at the time. In Argentina, circumstances were intensified by the Concordancia and the political and social turmoil in the country at the time. Import Substitution Industrialization was a tactic used in Argentina and internationally to repair the country’s economy. The depression in the 1930’s in the country of Argentina was one of the most devastating internationally.
Warren Buffet’s formidable investment performance was also demonstrated when Berkshire Hathaway acquired Scott & Fetzer. Berkshire Hathaway paid $315 million for Scott & Fetzer in 1985 after which they received significant dividends. Again, Buffet’s investment performance on the acquisition of Scott & Fetzer outperformed the S&P 500 evident by an internal rate of return (IRR) of 26.4% including the 1994 cash flow or 14.9% without 1994 cash flow on the Scott & Fetzer investment. Clearly, Warren Buffet’s positive investment performance carried a significant weight and influences the market to have a more optimistic outlook on his investments. Conversely, his historical records of investment success do add value to shareholders trust.
The Great Depression is said to be the most devastating time between the late 1920s through the late 1930s. Not only was The Great Depression was an economic slump in the United States, it also affected other countries, such as Europe, France, Germany and Australia. The recession that seems to plague every country in the world began in 1929 until 1939, making it the longest and biggest harsh depression to ever be involved in with the modern Western world. The years during the Great Depression was notably marked as one of the worst age of starvation and poverty in the twentieth century. So once the American economy slumped and the flow of American investment credits to Europe dried up, prosperity tended to collapse there as well.
392). Many lost their jobs and homes and farms, banks, and factories were shut down as well. The Great Depression was the turning point in American History. Although the Depression did create massive unemployment and the drought in the southern states that came not too far after it did destroy land, President Frederick D. Roosevelt came up with some plans to dig those people out of the hole they were in. The Depression was the onslaught to massive unemployment.