The Great Depression by Reg Grant Essay

The Great Depression by Reg Grant Essay

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The 1980s were just the beginning of a continuous bull market, creating wide-open access to credit. In the year 1987, David Herrlinger placed a bid to buy Dayton-Hudson Corp., though he was $6.7 million short of the purchase price. The market spread the news of his bid without an investigation on whether or not the payment of the purchase price was even realistic. In the same year, a pair of Texas oilmen, called “Desert Partners, LLP”, attempted a hostile takeover of U.S. Gypsum. U.S. Gypsum sold junk bonds at rates that Desert Partners could not compete with; Desert Partners, LLP eventually dropped the proxy war leaving U.S. Gypsum (USG) in a pile of debt. As companies dealt with debt financing, recapitalization often would occurred, often resulting in the same effects as a takeover would have done, as seen by the outcome of U.S. Gypsum’s finances. The banking system so quickly transferred from an uncertain bear market in the early 1900s to an over-confident bull market in the late 1900s. In 1928, Sewell Avery became president of U.S. Gypsum. Avery was referred to as the “Gloomy Sewell” due to his conservative banking style (as well as bearish approach) as he was cautious about the how he managed his company due to uncertainty economic times. At the start of the Great Depression, Montgomery, Ward Co, a struggling department store, asked to Sewell Avery to take over. Avery performed a mass movement forward for the business. After a proxy war between Avery and Wolfson, Sewell Avery retired ultimately leaving the company in “sound financial condition” (Grant 36).
Throughout Grant’s first chapter, Gloomy Sewell, Grant recognizes the consequences of bear and bull markets, each having pros and cons in the United States economy. Acco...


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...s. The Reserve banks produced credit, and commercial banks continued as well, thus “the public availed itself of the opportunity to borrow” (153).
According to Grant, “the war advanced the democratization of credit” through wartime finances, Liberty bonds, and the continuing expansion of credit. Credit and inflation is on the way to becoming a dangerous habit for the banking system, ultimately leading to uncontrollable inflationary consequences. Grant shows the obsession with this expanding as the public bought bonds in order to help finance foreign countries as well as our own. Though many bonds failed, the government arrogantly continued to create more easy money. Unfortunately, the public were confident in the democratization and expansion of credit; they were unaware of the effects their casual actions would have on the future of the country’s banking system.

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