The Great Depression Of The New York Stock Exchange Essay

The Great Depression Of The New York Stock Exchange Essay

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During the 1920s the New York Stock Exchange was a bustling place where many were investing and making money on their returns. Many made fortunes purchasing stocks and waiting for the value to escalate and then immediately selling them thereby making a profit. Suddenly the stock market crashed on October 29, 1929 eliminating 40% of the value of common stock in America. Stock prices plummeted as investors rushed to sell their assets before they lost everything. This was the start of The Great Depression. Many had lost their life savings after the collapse. Citizens lost confidence in the capitalistic economy and by 1933 the value of stock on Wall Street was less than a fifth of what it was in 1929. By the end of the year, investors had lost over $40 billion, and a decade of business failures, unemployment, and poverty began (Carrier, 1998). Many businesses ceased to exist and closed their doors thereby wiping out hundreds of thousands of jobs. This was the most ruinous business collapse in United States history.
The Great Depression of the 1930s undermined traditional American economic values in numerous ways. The first major impact was that one could not find work. Americans were used to doing an honest day’s work for an honest day’s pay. Americans before this disaster were used to the independent spirit and belief that if you worked hard you would eventually earn what you wanted or needed. The focus had always been on the individual to go out and work and to succeed. Unfortunately The Great Depression brought a rapid rise in the crime rate as many unemployed workers resorted to petty theft to put food on the table ( Many Americans found themselves going to soup kitchens and willingly accepting chari...

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...r government intervention during the height of The Great Depression. Keynes argued that government needed to push against the economic tide in order to lessen the impact of the boom and bust cycles that were inevitable in a free market economy. The government should spend less in times of economic prosperity and spend more during a downturn. His theory emphasized that the role of the government was to spend where necessary in order to stabilize the economy whether by lowering interest rates or increasing governmental outlays. When the country is in the midst of a boom period lawmakers hike the tax rate, cut social programs, and increase the cost of borrowing money through higher interest rates. However, when the country enters a recession government lowers the tax and interest rates and spends more money on social programs to stimulate economic activity.

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