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The Great Depression

Essay by   •  December 6, 2010  •  Research Paper  •  2,977 Words (12 Pages)  •  1,804 Views

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There were many primary causes for The Great Depression, Unequal distribution of money to the economy,

and the stock market speculation, and much more which all played a major factor for The Great Depression.

The Great Depression impacted everyone, it impacted different people of all kinds of backgrounds.

It was a low time for Americans in the 1920's, and for other countries also.

One of the causes were Uneven Prosperity, 0.1% of families made 100,000$ a year, and 80% had zero savings. 200 companies controlled 49% of all U.S industry

which caused uneven prosperity. Although the economy was booming in the 1920's most purchasing was done by credit.

U.S wealth was not spread evenly and the economy was unstable. The U.S. economy was booming in the 1920's and Uneven prosperity made recovery difficult.

People were buying thousands of shares of stock for as little as 10% down. Then people lost ten times as much as they put in.For the economy to function properly,

total demand must equal total supply. In the 1920's there was an oversupply of goods. 60 percent of cars and 80 percent of radios were bought on credit. 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. People hurried to get out of stocks and minimize their losses. As this happened, more people did the

same which exacerbated the situations. On Black Tuesday, a record16.4 million shareds were sold. This led to bank failures. Many people lost as much as ten times

their initial investment in the crash of Black Tuesday

Speculation in the 1920s caused many people to by stocks with loaned money and they used these stocks as collateral for buying more stocks. The stock market

boom was very unsteady, because it was mostly borrowed money and false optimism. When investors lost confidence, the stock market collapsed, taking them along

with it.People loss confidence and since they were developing mistrust of the economic situation, many wanted there money out of banks and buried in their yards.

The same thing that happened to the stock market. Banks ran out of cash and went bust. Few economic barriers existed to prevent total collapse. The banks that

did survive had to foreclose on a number of loans, collecting cars, land, and houses that nobody had the money to buy from the banks. As a result, these banks ended

up with tons of property but no way to get cash from it. This cash shortage closed even more banks.

With the economy falling in shambles and companies defaulting on loans, nearly all private and corporate investment ceased. Companies couldn't afford to

expand--in fact, many had to consolidate in order to cover the margins on their loans. In doing so they stopped hiring more people and began laying people off.

unemployment sky-rocketed. With people willing to work for less money--than companies were currently paying, wages lessened too. Farmers and workers did not

profit.

Impact-

All these changes affects the society in different ways .The Great Depression caused many people to close businesses and led the government to regulate the

businesses and economic affairs. Depression hurt a lot of people, especially working people who lose there jobs. Bank failures clean out some depositors savings if

funds are not ensured. When there was the depression, most people can not meet the house or apartment payments so they lose there homes and become homeless.

During a depression some people must live on charity just to support themselves and there families. Sometimes the people who get the charity money, clothes, and

food get kind of embarrassed that they need the money and they feel ashamed that they can't afford to support themselves which is basically not their fault. The Great

Depression caused lots of marriages and birth rates to decline. .

Such inventions as the automobile and color television spur business investments and consumer spending, causes expansion. After demand for these products has

been satisfied, spending drop offs resulting in contraction. Still other theories suggest that during expansion, business invest too heavily in buying. The expanded role of

the federal government came to be accepted by most all Americans by the end of the 1930's. Even republicans who had bitterly opposed the new deal shifted there

stance. Wendle Wilkie the republican president nominee in 1940 declared that he couldn't oppose reform such as regulation of the security markets and the utility

holding companies, the legal recognition of unions, or social security and unemployment allowances. What bothered him so much and not just him but other critics was

extensions of the federal bureaucy. The great depression was the worst

economic slump ever in the U.S History, and one which spread to virtually all of the industrialized world. However, the main

causes for the depression was the combination of the greatly unequal distributions of wealth throughout the 1920's, and the extensive stock market speculation that

took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. imbalance of wealth created an high,

but eventually lead to large market crashes. Another . However, the rewards of the "coolidge prosperity" of the 1920's were not shared evenly among all Americans.

According to a study done by the Brooking Institute, in 1929 the top .1 percent of Americans had a combined income equal to the bottom 42 percent. A major

reason

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