Recessions and Depressions Essay

The 1929 Stock Market Crash "We’d like to thank you, Herbert Hoover/ For really showing us the way/ You dirty rat, you Bureaucrat, you/ Made us what we are today (www.stlyrics.com)." These lyrics from the musical Annie place the blame for the 1929 Stock Market Crash solely on the then former president Herbert Hoover. The truth of the matter is that placing the blame for the Stock Market Crash on Mr. Hoover is very unfair. Herbert Hoover was only one of many causes of the Stock Market Crash. It is easy to try to place the blame for one of the most destructive events in the history of the American economy on one person, but the real causes lie in the rampant speculation, the lack of regulation of the stock market, and the questionable ethics of many of the companies and brokers that were involved in the market. Although the 1929 Stock Market Crash is generally blamed on a few scapegoats, it was actually caused by a multitude of factors, which makes finding a scapegoat impossible.

The causes of the Great Depression and the Recession of 2009 were similar in that job losses and stock markets were both causes, get they different in that Dust Bowl causes the Great Depression but it was not a factor in the Recession. Both the Great Depression and the recession drove people into a deep depression. During both of these times a lot of things changed for people.

In my first days in office, I confronted an array of immediate challenges associated with the Great Recession. I also had to deal with one of the nation’s most intractable and long-standing problems, a health care system that fell far short of its potential. In 2008, the United States devoted 16% of the economy to health care, an increase of almost one-quarter since 1998 (when 13% of the economy was spent on health care), yet much of that spending did not translate into better outcomes for patients.1- 4 The health care system also fell short on quality of care, too often failing to keep patients safe, waiting to treat patients when they were sick rather than focusing on keeping them healthy, and delivering fragmented, poorly coordinated care.5,6

The Great Depression is the “deepest and longest-lasting economic downturn in the history of the Western industrialized world,” that had occurred until that day. In 1932, stocks were only worth about 20 percent of their value than in the summer of 1929. The Stock Market Crash of 1929 was not the lone cause of the Great Depression, but it played a major impact in the collapse of the economy. History.Com stated that by 1933, approximately half of the banks in America had failed, unemployment had risen to 30% of the workforce.”

“The Roaring Twenties” stock market was more bull market than a bear market by a landslide. In this occasion people were “buying on credit” instead of paying up front. People were led to believe that the stocks were more profitable than what they actually were. This misconception came to a disruptive halt on Tuesday, October, 29, 1929 which is known as Black Tuesday when the stock market crashed. The stock market crashed and stock brokers could not pay off their loans they owed to the banks. So there were huge losses that caused businesses and banks to close down. And the people entered the Great Depression.

Historians believe because of the stock market crash led to The great depression while other argue saying the great depression could have been avoided. This book called The Great Depression: Delayed Recovery and Economic Change in America, 1929-1939 By: Michael A. Bernstein, Michael Alan Bernstein is about the great depression, the authors describe the great depression as an episode of economic development. Bernstein main concern is what cause the crash, but mostly why it lasted so long. He analysis the period between world wars one, and came to the convulsion economy’s largest sector in that era, manufacturing.

The Great Depression to place in the 1930’s, wreaking havoc on America’s economy. It cause unemployment, poverty, homelessness, and a loss of a lot of money, including people’s life savings. Many things lead up to it, but one of the main ones was the stock market crash. People believed that the stock market was as stable as could be, but it was very inflated and it crashed. People invested a lot of their savings into stocks as what was considered a smart move, yet as corporations reached their limit, everyone pulled their money which caused it to crash. The release of “one-time buy” products also lead to the crash, because people would buy new products you only needed one of, and once everyone had them, companies didn’t sell as much, therefore making less money, therefore forced to cut costs, which meant laying people off. This is what lead to the high unemployment rates. People blamed this depression on the president at the time, Herbert Hoover. They ridiculed him, by calling shanty shacks hoovervilles and leaving their empty pockets inside out, calling them hoover flags. The public was more than happy when Franklin D. Roosevelt came into office. All that American denizens wanted was to make it out of the hard times, make changes in the government, and get help from them. Unlike Herbert Hoover, FDR took a more hands on approach, giving direct aid to the public. Hoover believed in rugged individualism, expecting that people should be able to work together and get through

The Great Depression occurred “a bit after the stock market crashed in 1929” (History.com) causing many to be left homeless, women and men without jobs, and many to starve partially due to “farmers not having the money to harvest their crops” (Moore). The Government changed by implementing “The New Deal” and the “Second New Deal” in hopes of boosting America's economy system. This affected many as it helped by reopening work. World war II also played an important role in helping our economy as it sent over “12 million Americans to the military” while “war jobs took care of 17 million unemployed people.” (Folsom)

In 2001, there was 8-month recession. It started in march 2001 and ended in November 2001. The economy fell down by 1.1% in the first quarter. In second quarter the economy improved by 2.1% but again fell down by 1.3% in third quarter. In the fourth quarter economy recovered and grown by 1.1%.

Meanwhile, the overall price level dropped by about 1/3. Many people blamed the crash for the economical collapse. Some people held responsible were President Hoover, brokers, bankers, and businessmen. The cause of the depression cannot be linked to one individual or even a group of people. It is also unlikely that the crash of the market would have been large enough to lead the US economy into the depression and to sustain the downward spiral in business activity. (1929…) Why People Invested in the Stock Market During 1929, people invested in the stock market for 5 major reasons. The first was that the market was considered an easy way to get rich, quick. Although, about 4 million Americans, a small amount, invested in the stock market at one time. The constant influx of new investors coming in and old investors moving out ensured that new money was always flowing around. (1929…) Another reason was higher wages. This meant that everyone in America had extra money to put into savings or invest in the market. The 3rd reason was that at this time, money was made more readily available, from banks, at a lower interest rate to more people. Some economist debated that this influenced the stock market, it is conceivable that people took loans to buy more stock. (1929…) The fourth reason is that industry was over-producing, in anticipation of selling

Arguably the most important factor that influenced the Great Depression was the Stock Market Crash of 1929. The Stock Market Crash of 1929 was a four-day collapse of stock prices and it was and still is the worst decline in U.S. history. The Stock Market Crash started on October 29, 1929, this day was also known as “Black Thursday”. Hundreds of businesses and people were affected dramatically by this event. It forced thousands of businesses to shut down and left millions of U.S. citizens unemployed. The Dow Jones industrial Average even dropped down by 25%, it was calculated that the “United States $30 billion in market value which is equivalent to nearly $400 billion in today’s economy”(Amadeo). The Stock Market Crash impacted so many people because of all the trades and sold businesses. A record breaking “12,894,650 shares were traded”(History.com), which led to the outrageous rate of unemployment. Nearly 15 million people became unemployed which is 30% of the workforce in the United States. Since the market crashed so drastically and so many people sold their businesses and traded

After the crash, production fell nearly 50% from the business cycle peak in August 1929 to March 1933. Meanwhile, the overall price level of stocks dropped by about 1/3. Many people blamed the crash for the economic collapse. Some people held responsible, fairly or not, were President Hoover, brokers, bankers, and businesspersons. The cause of the depression cannot be linked to one individual or even a group of people. It is also unlikely that the crash of the market would have been large enough to lead the US economy into the depression by itself and to sustain the downward spiral in business activity. (1929…)

The stock market crash of 1929 was one of the primary causes of the Great Depression, as reported by many economists. However, the stock market crash also had underlying causes that could have been prevented. The crash began on October 24th, 1929 and was considered the most devastating stock market crash in history, in which over 15 million Americans were unemployed. The causes to blame for the stock market crash from most to least are as follows: The banks that gave loans, the average American, wealthy people and businessmen, the Federal Reserve Board, and the government.

The business cycle is the short-run alternation between economic downturns and economic upturns (Investopedia n.d.). A recession is an economic downturn and happens in every country and some recessions are worse than others and the output of GDP and employment are falling farther and faster. The great depression lasted from 1929-1933 and was a deep prolonged downturn in the business cycle before a recovery/expansion of the business cycle occurred and GDP and employment started to rise (Krugman & Wells. 2012). The next recession lasted from 1981-1982 and was comparatively smaller than the first (Krugman & Wells. 2012). More recently in 2001 a slump in the economy was noted and was followed by the great rescission of 2007-2009 (Krugman &

Average cost is total cost divided by total output at a specific point. For instance if 100 units are produced and total cost incurred is 200 then average cost of one unit would be 2/unit. Whereas Average revenue is calculated same as average cost however, instead of total cost we take total revenue.