Following WW I in the 1920’s, there was a decade of an economical explosion. The post-war era brought about many changes. Businesses showed great profits, migration to big cities of industrial companies occurred with the hopes of making a better life, people were given the opportunity to purchase things on credit, while others borrowed money making poor decisions buying high priced stocks with the intention of selling stocks for a profits to repay lenders. When Black Tuesday occurred on October 29, 1929, this marked the beginning of the Great Depression that left devastating economic hardships for the American people. Although it was always my belief that the stock market crash was the sole contributor of the Great Depression, there was …show more content…
S. and other countries that had industries charged high import taxes on good that were offered for sale. These taxes prevented counties from selling the goods they needed to earn the money to repay loans to the U.S. banks. In a three year period over 9,000 banks went bankrupt or had to close their doors to avoid bankruptcy which led to a decline in purchasing powers. When the banks started failing people lost their saving because the banks were uninsured. The banks weren’t as willing to offer new loans.
At the same time this was occurring, there was the distribution of unequal income. Businesses were showing great profits during the 1920‘s, however the working class only got a small portion of this wealth with their low wages. People with low incomes purchased merchandise on credit. People thought that they had more money to spend on materialistic possessions using credit. Advertising increased, enticing people with the “buy now, pay later” slogan which in turn caused many consumers to accumulate so much debt that were unable to keep up with payments on the items they purchased, and they were repossessed. Once the slowing of manufactured goods occurred, inventory accumulated and there was a backlog of purchasing merchandise which caused even less spending that didn’t help the economy.
Another problem contributing to the Depression was the epic drought that occurred in 1930. During WWI, thousands of farmers migrated to the Great Plains area because of its rich
The Great Depression not only affected America, but the rest of the world as well. This global depression began in the United States in 1929 but would soon play an important role in why countries turned inward to economic independence and lead to the rise of communism. The 1920’s had Americans living in great prosperity. Consumers ruled the marketplace, buying as much as they could afford, even spending tomorrow’s wages today. Companies were about to face the grim reality that they were producing more goods than they were able to sell. People simply did not have the money to buy all these products and everyone instead began to invest their money in the stock market. In October of 1929, the stock market collapsed in America which soon would lead to the “domino effect” in Europe.
In the 1950’s America was changing, the difference in just two decades was phenomenal. After World War II America became unrecognizable from the past. It was almost as if America did not even go into the Great Depression. In 1950 new signs of America influence came from every which direction. With the American economy booming, Americans were able to come up with more ideas to go along with the society they were now living.
The Roaring Twenties is known as an age of parties, jazz, and overspending. After World War I, the optimistic American people reacted by celebrating and overspending. They purchased new appliances such as cars, radios and refrigerators; they purchased luxury items like clothes and invested in stocks. Their new attitude towards the booming American economy was carefree, leading to a series of events. First the stock market crashed. Next, the banks failed. Then, companies laid off employees who were unable to make the payments on the items they purchased. Tariffs and droughts further complicated the situation. This decade became known as the Great Depression, because the economic setbacks impacted everyone and everything. But the question is “Why did Americans lose so much money in such a short period of time?” One answer is, the failing stock market. A second is unregulated banking systems which allowed for buying on margin. Third, the lifestyle following World War I was too materialistic. The Great Depression was caused by Americans failing to responsibly manage their money.
The stock market crash of 1929, additionally called the Great Crash, was a sharp decrease in U.S. stock exchange values in 1929 that added to the Great Depression of the 1930s. The market accident was a consequence of various economic imbalances and structural failings (Pettinger). In the 1920s, there was a fast development in bank credit and advances. Energized by the quality of the economy, individuals felt the share
Many people believe the Stock Market crash and the Great Depression are one in the same. In the nineteen twenties the Dow Jones went from sixty to four hundred. People became instant millionaires. Trading became America’s favorite pastime and a quick way to get rich. There were Americans mortgaging their home and investing their life savings in stock such as ford. However, there were many fake companies that formed to deceive the inexperience investors. Many investors did not believe that a crash was possible; they all thought the market would always go up.
The Great Depression of the 1930’s was caused by many problems. They include overproduction, monetary policy, war debt, tariffs, the stock market crash, and unequal distribution of wealth. These each play a specific and intricate role in bringing the U.S economy to its knees.
The use of credit to buy entertainment created an speculative bubble which finally burst in 1929 with the stock market crash and people “running on banks” desperate to get the money in their savings. This caused over 600 banks to close 6 days before the end of 1929. The banks only had so much money and once the money ran out, it was gone forever. One man, a janitor had $1000 saved up over 40 years and lost it all when he could not get to the bank in time. By 1933 some states had no banks open, 1000s of homes were foreclosed and 34% of americans had no source of income. The innovation of technology caused many people to buy on credit and when the people could not pay it back since all the banks were closed the economy was brought to a
In the 1920s there was a trend of consumption by the American people, many citizens bought stocks and luxury items on credit rather than cash. This took a terrible turn in 1929 when the stock market crashed on October 29th. This was one of the major events that led to The Great Depression. The Great Depression was also caused by speculation and installment buying, income maldistribution, and overproduction. Each of these topics created serious problems for the economy that ended with debt, unemployment, and poverty.
The Great Depression was a time of great economic tragedy during the 1930’s. October 24, 1929 was the day of the stock market crash, causing economical shortage everywhere, even globally, and this scared everyone, including the rich. This day was/ is known as “Black Thursday”, where over 2.9 million shares were traded. On “Black Tuesday”, five days later, more than 16 million more shares were traded in another wave of panic. Many investors then lost confidence in their banks and demanded deposits in cash which forced the banks to liquidate loans in order to supplement their on hand cash reserves. By 1933, around 15 million Americans were unemployed and nearly half of the country’s banks had failed. This stopped Americans from purchasing which then led to less production of goods and decreased the amount of needed human labor. In the end, millions of shares ended up worthless, and those investors who had bought stocks with borrowed money were wiped out completely.
The economic expansion of the 1920’s, with its increased production of goods and high profits, culminated in immense consumer speculation that collapsed with disastrous results in 1929 causing America’s Great Depression. There were a number or contributing factors to the depression, with the largest and most important one being a general loss of confidence in the American economy. The reason it escalated was a general misunderstanding of recessions by American policymakers of the time.
What is the greatest economic since the Great Depression in the 1930’s? Economist’s today are calling it the Great Recession of 2008. To start, there is history that needs to be addressed to compare the impacts of the Recession to modern times. The Great Depression got so bad that people were issued ration stamps in order to receive common goods to survive. People had to farm and make their own cloths, and if by chance a person had shoes they were considered very fortunate. The money system was almost not existent one could say because of the amount of trading that was done to survive. One of the main differences in the Great Depression is that the rich didn’t get richer overall. According to R.A., J.S. AND L.P., “the top 1% only captured about 28% of total income growth from 1933 to 1936”. (R.A). The rich did continue to get richer though as it is said in the years coming after the depression was over, and a major leap when the Great
during the 1920's to a point that most industries were making so much of everything that there was a limit to that amount that could be sold.
Uneven distribution of wealth serves as another cause of the Great Depression. America was wealthy in the 1920s, but this wealth did not extend to all segment of the society. The gains made by wealthy Americans in the 1920s far outstripped gained made by the working class. By the time of the stock market crash, the upper one percent of the population controlled over sixty percent of the nation’s savings. On the other hand, over three quarters of American families made less than $3000 a year. Problems that could develop from this situation were obvious. The bottom-line three-quarters of families were too poor to purchase much to help the economics to flourish. Underconsumption, in the long run, was a vicious circle to the economy. People had no money to spend. The income of many firms dwindled. More people were laid off or cut hours and thus further cut their spending. The economics became stagnant.
During the 1920’s, four of America’s leading industries began to struggle. First, railroads had difficulties because of the growing competition from cars, trucks, and busses. Second, textiles floundered because of the foreign competition from India, China, Japan, and Latin America. Furthermore, the revolutionary transformation in women clothing reduced the amount of material needed and thus lowered the demand for cloth. Third, the coal mining industry struggled because of competition from cheaper, more widely available resources such as natural gas, oil, and hydroelectric power. Fourth, America’s agriculture industry staggered chiefly from overproduction. Many farmers borrowed money to expand their operations and couldn’t pay back their loans because the prices of crops dropped about 50 percent due to foreign agricultural competition.
The roaring twenties was a time filled with hope and change. President Warren G. Harding promised a “return to normalcy”, which reflected his own conservative values and the voters’ wants for stability and order. Americans felt that they had been through more than enough, and desired prosperity. During the years 1919 and 1920 the Eighteenth and Nineteenth Amendments were passed; the outlaw of alcoholic beverages and the right for women to vote, which ones of the many reasons society was turning their backs on Progressivism. Republicans were beginning to return to their previous dominance. The 1920’s was an economic boom for America, including everything from an increase in jobs, a rise in plentiful goods, new consumer products, and the reduction of taxes. The country was filled with jazz music, dance, and what appeared to be a brighter future. The 1929 crash of stock market was the beginning of a downward spiral leading in to the Great Depression. The stock market crash is often to be confused as the cause of the Great Depression, although that is false. A few of the issues that lead to the Great Depression included; farming (which decreased in demand as farms increased through the states during World War I), banking, and mass unemployment. Capitalism took shape as what was once the individualistic Protestant work ethic was reshaped into industrial work on a grand scale. Each worker contributed to the greater good, and the workers were presided over by a boss