Banking Insitutions and Big Businesses: Regulated or Deregulated

The stock market crashed on Thursday, October 24, 1929, less than eight months into Herbert Hoover’s presidency. Most experts, including Hoover, thought the crash was part of a passing recession. By July 1931, when the President wrote this letter to a friend, Governor Louis Emmerson of Illinois, it had become clear that excessive speculation and a worldwide economic slowdown

In 1929 the Stock Market crashed was said to have “ushered in” the Great Depression. After Wall Street and the Stock Market crash of 1929, the banks began to fail. By 1933 over half of the banks in the United States had failed and went out of business. The economy came to a full stop as businesses could no longer access credit lines to purchase inventory, checks were no longer accepted as currency due to the multitude of failing financial institutions which led to an unemployment rate reported to be as much as 30 percent of the available workforce. (“First measured century: Timeline,” n.d.)

Beginning on October 29, 1929, there was a stock market crash in the United States which was a significant turning point because it halted the considerable economic success from the roaring 1920s, leading to a nationwide depression. This event took place during the presidency of Herbert Hoover, and it resulted in a drastic change of the United States’ political, economic, and social structure. This event also spurred the interest of many political figures to try to save the economy including Franklin Delano Roosevelt who issued many reforms for the protection of the people and to restore the vitality of the nation. The Stock Market Crash of 1929 was a major turning point in United States History because it represented the negative impacts of the changes derived from the roaring 20’s, and the events that occurred after this event strongly impacted the structure of society leading up to today.

One would say that the Great Depression is one of the darkest times in American history. The Great Depression did not only affect the United States, but also other countries who were heavily invested in the United States, such as Germany and Great Britain. Following the crash of the stock market in 1929, the level of unemployment skyrocketed and economies around the world plunged. The United States faced those dark years until about the later part of the early 1930s, when things start to head in an upward trend. Some of this success could be contributed to Franklin D. Roosevelt’s implementation of the New Deal in an attempt to restore confidence in the economy, and the political system. Ultimately, it would still take years until the world economy and especially the United States economy was anywhere near its pre stock market crash levels. The success of the New Deal was short lived when the economy started to take a turn downward in the late 1930s, because FDR could not get enough demand to successfully implement his New Deal. In 1939 there was another positive trend with the beginning of World War II. Although the New Deal helped to restore confidence in the economy and the political system, nevertheless it was the spending of World War II that ended the Great Depression, because it lowered the level of unemployment, increased productivity, and helped to boost the United States economy upward, although capitalism still survived.

One of the most devastating times in United States history was created by a multiplicity of avoidable events and reckless practices that all came together to halt all economic progress. This time was the Great Depression. On surface level, it is easy to assume that the Great Depression resulted solely from the huge 1929 stock market crash, but while the crash played a large role, the Great Depression was caused by multiple other factors which built upon each other to such a height and eventually implode the economy of the United States. Before the Great Depression, there were simply too many daredevil economic decisions made by millions of people that made blind leaps of faith into the market. If the market crashed, they were doomed, but the idea of getting enormous returns on their money blinded them from

The United States was in a very desirable situation in the early 1920s. The economy was booming, mostly due to the soar in the stock market. The previous two president were very laissez faire and kept the government from interfering too much into the trade system. We celebrated these presidents at the time, they were helping to bring upon a great era of wealth to the country, and we had even elected another hands-off president in 1928. Everything seemed to be going great until 1929 when it all went downhill. There were many events leading up to a fall in the economy. People were installment buying and charging goods to credit, businesses were overproducing their products, other citizens were making risky investments with borrowed money, and

Where were you doing the Great Depression? Were you an entrepreneur, a consumer, a President, or another position in government? Did you protest against what was happening, or were you a part of the catalyst? These are some questions that makes us realize what exactly happening during this time. As many know, there was a worldwide collapse of the economy during the 1930s. This event, the Great Depression, was very drastic and left consequences that would impact the world forever. This crisis happened to different areas of the world at differing times specifically, but generally it was around the 1930s. During this time, there was no one watching the U.S. economy, so it was very easy for it to fall apart. People began to have a false sense of prosperity and people were over dependent on production. Stocks and trade fell, and the economy as we knew was going downhill and there was no way up. Primary sector jobs involving construction and agriculture suffered the most, making certain countries go down harder than others. It is generally agreed that the overall cause of the Great Depression was a surge of overconfidence in buyers, who began to buy things without double checking and also things they didn’t realize they couldn’t afford. But, others may put the blame on the failures of the banks. Around this time, the situation was bleak and hope was diminishing as fast as the economy was. As indebtedness increased, so did deflation. This happened because the margin requirements

The Dodd-Frank Act reestablished some of these needed measures to prevent this crisis from occurring again in the future. (Jacobson, 2013)In reviewing the differences between the Great Depression and the Great Recession, it is clear that leaders incorporated lessons from the history of the Great Depression and utilized those lessons in the recovery in the Great Recession. First of all, the Great Recession never reached the magnitude of the Great Depression due to the quick actions of policymakers and President Bush. Although there was an extensive cost to achieve overcoming both crises in America,

History helped to recognize the parallels between these eras and learn from them. The crisis of 2008 was not nearly as bad as the Great Depression, but like the Depression consumers lost trust in the market and were afraid to invest in the economy. The Housing Crash catastrophe, like the Great Depression contributed to the failure of banking institutions and led to high unemployment rates. Unlike the Great Depression, the crisis of 2008 was supported by more than a dozen economic stimulus packages provided by the federal government to jumpstart the economy. The federal government stepped in to bailout the banking institutions to avoid another Great Depression. It is important to look back on the history of these two national devastations and learn from their mistakes so we can be better prepared for future economic downfalls in the

George Santayana, a Spanish poet and philosopher said, "Those who do not learn history are doomed to repeat it." This quote applies to the Great Depression of 1929 and the Great Recession of 2008. There are many similarities between the two, like the causes, the actual events, and the aftermaths. Several factors led to the Great Depression, which were the following: overproduction by business and agriculture, unequal distribution of wealth, Americans buying less, and finally, the stock market crash of 1929. The Great Recession also had similar factors leading to it, like the housing “bubble” burst and less consumer spending. In both events, the Presidents enacted programs that they believed would help the American people.

In America, the Roaring 20’s encouraged people to buy stock with margins, which are stocks bought on loans. When the market crashed, people went into debt causing the economy to plummet because many people lost their life savings. For many reasons, the Great Depression is considered to be the worst time for America’s economy. President Roosevelt created the New Deal to help stabilize the economy. However, President Roosevelt and his New Deal programs were not effective in overcoming the Great Depression and rebuilding the U.S. economy.

The political stalemate of the American government between Republicans and Democrats has affected the US economy negatively. The foundations of the crash can be blamed on the government and its organizations. The biggest government failure was the Federal Reserve. Through three presidencies era and two Federal Reserve chairmen problems persisted. The Feds really started to turn away from their core principles in the 1990s. The minor tech-bubble recession in the early 2000s previewed to the Feds possible major problems with how the financial services are doing business. But both former Fed Chairmen, Alan Greenspan and Ben Bernanke, predicted if a problem popped up in the ever growing United State economy, it would not have a significant or

The Great Depression, as an unprecedented time of economic collapse and social disarray, cast a dark shadow over the U.S. and affected countries worldwide. The causes of it have always been a fascinating topic for historians and economists. There has been much debate, and no agreement has been reached. In the mid-20th century, John Kenneth Galbraith published one of his bestsellers, the Great Crash, 1929. In less than 200 pages, the book vividly recounts the history of the Wall Street Crash of 1929, covering the lead-up, actual occurrence, and aftermath. Professor Galbraith, with his witty prose, keen insights, and crisp narration, argues that the blind optimism and excessive speculation kept up the market mania and eventually led to the crash. The stock market crash certainly contributed to the Great Depression, but Galbraith also assigns significant roles to other weaknesses in the economy.

It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.

At the same time, the regulators should be as transparent as possible and fully accountable. The accountability and transparency of the regulator will increase the credibility of the regulator and in-turn benefit the regulated entity. Types of Financial Regulation Financial regulation in a country can be done either by a single body called a single regulator or multiple bodies co-existing and working together or in a hierarchy of entities known as multiple regulators. A regulator whether single or multiple does not determine the economic standing of a country or its financial strength. Many developed countries of the world follow either the system of single regulation or multiple regulations. Often in times of economic crisis or financial boom in the country’s economy the government of the nation will review its regulatory system and choose to expand or close down some of its regulatory bodies.