This maldistribution of income between the rich and the middle class increased throughout the 1920’s. A major reason for this large and growing gap between the upper class and the working class Americans was that the manufacturing output increased throughout this period. As the production costs fell, wages went up slowly, and prices for goods remained at a constant. The majority of the benefits created by increased productivity fell into the hands of corporate owners. The federal government also helped to make the growing gap between the upper and middle classes.
The Great Depression was a huge economic downfall in North America and involved many other industrialized countries of the world. The Depression began in 1929 and lasted for about ten years. Millions of people lost their jobs along with many businesses going bankrupt. The common misconception of the Great Depression is people think that the stock market crash was the main cause for it. There were many causes for the Depression; unequal distribution of money during the 1920’s was the main cause of the Depression.
The U.S. economy was also reliant upon luxury spending and investment from the rich to stay afloat during the 1920's. The significant problem with this reliance was that luxury spending and investment were based on the wealth's confidence in the U.S. economy. imbalance of wealth lead to large market crashes. Black Tuesday, 1929. People saw stocks were actually falling.
The largest reason for the growing gap between the rich and the working-class people was the sudden increase in manufacturing during the 1920’s. The people of the working class were significantly increasing their output, but their wages only increased slightly. For example, the average worker out put from 1923-1929 increased about 32%, but the average income of the worker only increased about 8% (Gusmorino, Main Causes of the Great Depression). Therefore one may conclude that wages only increased one-fourth the amount production increased. Another amazing feat of the manufacturing increase was that prices for goods stayed the same, therefore the executives in the companies were keeping the mass amounts of profit that were now coming into the company.
Great Depression was one of the most severe economic situation the world had ever seen. It all started during late 1929 and lasted till 1939. Although, the origin of depression was United Sattes but with US Economy being highly correlated with global economy, the ill efffects were seen in the whole world with high unemployment, low production and deflation. Overall it was the most severe depression ever faced by western industrialized world. 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).
The U.S. economy was booming throughout the “roaring twenties.” The nation’s total realized income rose from $74 billon in 1923 to $89 billion in 1929. However, these profits were not distributed equally among all Americans which lead to the huge disparity in wealth among classes. One example of this discrepancy is Henry Ford whose personal income was $14 million in the same year in which the average personal income was $750. In 1929, the top 0.1% of Americans had a combined income equal to the bottom 42% of Americans. That same top 0.1% controlled 34% of all savings, while 80% of Americans had no savings at all.
Imagine a society where over 25% of the population was unemployed. That is what it reached during The Great Depression (“The Great Depression”). During the depression unemployment rates were the highest they have ever been. It is highly speculated to this day on what exactly caused The Great Depression. Most historians agree it was a chain of events, one after another, that brought our country into chaos.
The Great Depression is an event in our nation's history that dramatically changed the lives of America’s people in the 1930s and beyond. After a decade of excess, prosperity and happiness, the Depression threw our nation into a spiraling decline, the likes of which we had never seen. Hints of these difficult times have been experienced again more recently as our country battled through the Great Recession. A number of similarities and differences between the Depression of the 1930s and the Recession of the late 2000s decade are noteworthy. The Great Depression altered American social fabric in the 1930s greatly.
There are numerous reasons that led to and caused the Great Depression, but undoubtedly the biggest contributor of the slump came in 1929 when the American stock market crashed. The Wall Street Crash of 1929 sent shock waves through all the economies of industrialised nations, and plunged the Capitalist system into the worst economic slump in history. This essay will attempt to consider the effect of the Wall Street Crash in causing the Great Depression, but also consider other causes such as the massive unequal distribution in income that existed and the lasting effects of the war in the form of debts owed to the US. To understand the sheer consequence of the Great Depression we can consider a normal economy. Most economies experience a ‘Boom and Bust’ cycle, where economies fluctuate between times of prosperity and times of recession.
Money was distributed mostly between the rich and the middle-class, in the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy this type of the economy eventually lead up to large market crashes. These market crashes, caused the American economy to be overturned. The total income in the United States rose from $74.3 billion in 1923 to $89 billion in 1929 this rise in the economy was due to the Coolidge Prosperity(Business and Industry was flourishing and big business became bigger so the stock market went up greatly) even after this boost in the stock market the money wasn’t making its way around equally because most farmers were still poor. United States maintained high 1. tariffs on goods imported from other countries, at the same time that it was making foreign loans and trying to export products.