The Great Depression in America

The Great Depression was a time of total despair. Years of economic downturn not only affected the United States but may European countries as well. Americans endured lost of fortunes, homes, jobs and personal tragedies. Very few alive today remember what it was like, and to the rest of us, it is just a piece of history that we can only imagine. 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. In retaliation governments worldwide sought economic recovery by adopting restrictive autarkic policies and by experimenting with new plans for their internal economics. As a result, global industrial production declined by thirty-six percent between 1929 and 1932. Worldwide trade dropped by an all time high of sixty-two percent. (Annals) The question of the day was, How did this happen?

Mass speculation went on throughout the late 1920’s. In 1939 alone, record volumes of one-billion-one hundred twenty-four million-eight hundred thousand-four hundred and ten (1,124,800,410) shares were traded on the New York Stock Exchange. (Drewry) From early 1928 to September 1929 the Dow Jones Industrial Average rose from one hundred ninety one to three hundred eighty one. This sort of profit was irresistible to investors. Company earnings became of little interest; as long as stock prices continued to rise large profits could be made. Through the practice of buying stocks on margin , one could buy stocks without the money to purchase them. Investors went wild for this idea drove the market to unheard of high levels. By mid 1929 the total outstanding brokers’ loan was over seven billion dollars and eight and a half billion dollars over the next three months. Interest rates for broker loans were going for...

... middle of paper ...

...d be a little more on the cautious side and take a good look at our own economy. We should take into account that it could happen again. The Great Depression was not the only depression or the longest, that title being held by the Long Depression of the late nineteenth century, nor was it the sharpest in contraction. The one after the first World War being a deeper drop, it represented the greatest fall from the general trend-line of growth. Are the signs there that we are headed for another downturn? Are we all a little to at ease with our economy? Maybe we should take a closer look.

Bibliography

Works Cited

Boardman, F.W. The Thirties: America and the Great Depression. N.Y. Henry Z. Walcki Inc. 1967.

Drewry, Robert and A.J. O’Connor. The Indigenous Role in Business Enterprise. New Guinea: New Guinea Reasearch Unit 1970

Schraff, Anne E. The Great Depression and The New Deal. NY Franklin Watts 1990

The Annals of America Vol.15. 1929-1939 The Great Depression. William Benton & Encyclopedia Britannica 1968

The Writers and Photographers of the Associated Press - 20th Century America – The Great Depression 1929-1939. Grolier Educational Corp. 1995.