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Historical context for the great depression essay
Introduction about great depression
Social impact of the wall street crash in usa
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Back track to the Great Depression, the 1920s’ was an era of progression based on social and political changes. At the time the country was just coming out of WW1 that occur two years prior and the country is looking to an era of peace and tranquility. During the 1920s era the country was facing an economic boom called the Roaring 20s. The 1920 was called the Roaring 20s due to the “new technologies like the automobile, household appliances” (Sullivan). Due to these new products consumer spending increase, and in return stimulated the economic. Every ting seems perfect until late 1929 and rather than benefiting from the economic growth and enjoying the new standard of living, people began to witness a huge decline in the economic referred to …show more content…
The 1929 stock market crash known as Black Tuesday was the result of economic imbalance that nobody noticed. The cause of this economic imbalance was none other than people buying stock on the Margin, Agricultural recession and the credit boom. To begin, one of the causes of the stock market crash was people buying on the margin. Buying on the margin is an legal act when people only pay a small percent of the shares like 10% to 20% and to cover the rest of their shares they would borrow the money from banks to cove the value of the stock. Doing it this way enables more money to be into the stock, as a result increasing the value all together. The process made people a lot of money and nobody was worrying about the aftermath. Though what they were doing was right in the eye of the law not a single person too to account what would happen when the prices for their stock fell until it was way too late. When the market crash all the investor lost all their money. Another effect of the stock market crash was due to the Agricultural recession. In the year of 1929, the American Agricultural sector was struggling to maintain its profitability. To explain, many “many small farmer were driven out of the business because they could not keep up with the new economic” (Pettinger). The reason this occurred was due to better technology …show more content…
To explain the crash of the stock market greatly reduced “American aggregate demand substantially. Consumer purchases of durable goods and business investment fell sharply after the crash” (Romer). The financial crisis made consumers and firms to stop spending money and start saving their money. Another aspect of the Great Depression was the banking crisis. The banking crisis began due to the financial crisis and that made consumer lose confidence in their banks and demand that their bank give them their money back. Banks, “which typically hold only a fraction of deposits as cash reserves, must liquidate loans in order to raise the required cash. This process of hasty liquidation can cause even a previously solvent bank to fail” (Romer). The loss of confidence in the solvency bank cause people to starting saving the money at home and that in return causes many banks to close and at this time the Great Depression was at full
During 1928, the stock market continued to roar, as average price rose and trading grew; however as speculative fever grew more intense, the market began to fall apart around 1929. After the stock market crash, a period began that lasted for a full decade, from 1929 to 1939, where the nation plunged into the severest and the most prolonged economic depression in history - the Great Depression. During this inevitable period, the economy plummeted and the unemployment rate skyrocketed due to poor economic diversification, uneven distribution of wealth and poor international debt structure.
The stock market crash of 1929 was one of the main causes of the Great Depression. Before the stock market crash, many people bought on margin, which caused the stock market to become very unbalanced, which led to the crash. Many people had invested heavily in the stock market during the 1920’s. All of these people who invested in the stock market lost all the money they had, since they relied on the stock market so much. The stock market crash also played a more physiological role in causing the Great Depression.
When “Black Tuesday” struck Wall Street on October 29th, 1929 investors traded 16 million shares on the on the New York Stock Exchange in just a day which caused billions of dollars to be lost and thousands of investors who got all their money wiped out. After the fallout of “Black Tuesday” America’s industrialized country fell down into the Great Depression which was one of the longest economic downfalls in history of the Western industrialized world. On “Black Tuesday” stock prices dropped completely. After “Black Tuesday” stock prices couldn’t get any worse or so they thought but however prices continued to drop U.S fell into the Great Depression, and by 1932 stocks were only worth about 20 percent of their value. Due to this economic downfall by 1933 almost half of America’s banks had failed. This was a major economic fallout which resulted in the Great Depression because it caused the economy to lose a lot of money and there was no way to dig themselves out of the hole of
The stock market crash was a result of rapid growth, and banks and lenders overextending loans and investments. Overextending loans and investments resulted in factories shutting down, banks closing, people losing their life savings and millions of Americans out of work, thousands starving and homeless. The rural areas of America were much luckier than the urban in that they were not hit as hard by the depression, they were still able to grow their crops, raise their animals and continue on with life as normal for the most part. In 1930 a severe drought struck America which only helped to make the Great Depression worse for all of America, including those in rural areas with farms as it effected their ability to grow crops and water their animals. The droughts effected those in the Great Plains and their surrounding areas the most. For years the lands had been stripped of its natural vegetation and soil had been overworked to produce crops, mainly wheat in large amounts. Overworking the land caused it to lose its vitality, leaving no sod to hold the sand or powdery dirt down. Without rain these problems were just exasperated, vegetation was unable to grow back to replace what was
The Great Depression hit the United States on October 21th of 1929, now commonly referred to as “Black Tuesday”, when the Stock Market crashed. This abruptly ended the roaring and glamorous 1920’s as companies lost everything and were forced to lay off their workers. About 15 million workers were out of jobs by 1933. Companies weren't the only things failing, banks were closing left and right. Up until that point, banks were not required to ensure the depositors' money and so some banks decide to invest their depositor's money into the stock market. When the stock market crashed banks lost all of their depositor's money. This put anxiety in people as they lost faith and trust in their banks. This panic
The years berween 1929 and 1933 were trying years for people throughout the world. Inflation was often so high money became nearly worthless. America had lost the prosperity it had known during the 1920's. America was caught in a trap of a complete meltdown of economy, workers had no jobs simply because it cost too much to ship the abundance of goods being produced. This cycle was unbreakable, and produced what is nearly universally recognized as the greatest economic collapse of all times. These would be trying years for all, but not every American faced the same challenges and hardships. (Sliding 3)
There is no doubt that the stock market crash contributed to the great depression, but how? One way that the Crash contributed to the depression was the loss of money it caused to the average man. It is believed that in the first day of the crash almost a billion dollars were lost, this took a large amount out of the pocket of the common man. Without this money people were unable to purchase consumer goods, which the United States economy was based on. Another way the Crash contributed to the depression was the loss of confidence in the market. When t...
Finally, investors went into “panic mode” on October 24th, 1929, and began trading and dumping their shares, totaling a record of 12.9 million. Of course, following “Black Thursday,” the more well-known “Black Tuesday” ensued as a result of this. Between Black Monday and Black Tuesday, the market lost 24% of its value, and investors bought and traded over 28.9 million stocks. These stocks, now worthless, were used as firewood for some investor’s homes. The Dow Jones Company is perhaps the greatest example for this crash. Dow Jones started at 191 points at the beginning of 1928, then more than doubling to 381 points by September 1929. The crash caused their record 381 points to plummet to less than 41 p...
The Stock Market Crash of 1929 was the most devastating crash in U.S. history. It started on October 24, 1929 and the downfall ended in July 1932. I always wondered what caused this calamity. Before starting this report, I knew basic idea about the crash. It was a time of decline and huge fortunes were lost. Now I can figure out just why.
October 29th, 1929 marked the beginning of the Great Depression, a depression that forever changed the United States of America. The Stock Market collapse was unavoidable considering the lavish life style of the 1920’s. Some of the ominous signs leading up to the crash was that there was a high unemployment rate, automobile sales were down, and many farms were failing. Consumerism played a key role in the Stock Market Crash of 1929 because Americans speculated on the stocks hoping they would grow in their favor. They would invest in these stocks at a low rate which gave them a false sense of wealth causing them to invest in even more stocks at the same low rate. When they purchased these stocks at this low rate they never made enough money to pay it all back, therefore contributing to the crash of 1929. Also contributing to the crash was the over production of consumer goods. When companies began to mass produce goods they did not not need as many workers so they fired them. Even though there was an abundance of goods mass produced and at a cheap price because of that, so many people now had no jobs so the goods were not being purchased. Even though, from 1920 to 1929, consumerism and overproduction partially caused the Great Depression, the unequal distribution of wealth and income was the most significant catalyst.
Beginning on Black Tuesday, October 29th, 1929, a total of 14 billion dollars was lost in America’s economy. Near the end of the week the 14 billion turned into a total of 30 billion dollars (The Great Depression Facts). Many events during the Stock Market Crash caused damage to the economy and lifestyle of the country, ending with recuperations from The Depression. There have been many issues that caused the stock market to crash. One major effect on the Great Depression was the current state of agriculture.
The 1920s were known as carefree and relaxed. The decade after the war was one of improvement for many Americans. Industries were still standing in America; they were actually richer and more powerful than before World War I. So what was so different in the 1930’s? The Great Depression replaced those carefree years into ones of turmoil and despair.
The stock market crash of 1929 was the primary event that led to the collapse of stability in the nation and ultimately paved the road to the Great Depression. The crash was a wide range of causes that varied throughout the prosperous times of the 1920’s. There were consumers buying on margin, too much faith in businesses and government, and most felt there were large expansions in the stock market. Because of all these positive views that the people of the American society possessed, people hardly looked at the crises in front of them.... ...
The fall was dramatic to the point that stock costs were even beneath the edges which speculators had kept with their agents. As a result, financial specialist, as well as even the business firms, went ruined. 2 days of 15-16 the October, Dow Jones fell by 33% and the occasion has then known as the Great Crash of 1929. Along these lines with financial specialists going bankrupt, an unnoticed problem was found in American product need. Buyer Purchase of necessary merchandise and business investment fell strongly after the stock exchange crash. Accordingly, organizations experienced stock heaping of their inventories and the genuine yield fell quickly in 1929 and all through 1930 in the United
The Great Depression was a period of first-time decline in economic movement. It occurred between the years 1929 and 1939. It was the worst and longest economic breakdown in history. The Wall Street stock market crash started the Great Depression; it had terrible effects on the country (United States of America). When the stock market started failing many factories closed production of all types of good. Businesses and banks started closing down and farmers fell into bankruptcy. Many people lost everything, their jobs, their savings, and homes. More than thirteen million people were unemployed.