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The cause of the depression in the united states
The cause of the depression in the united states
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After the end of World War I the Untied States entered a period of the Roaring Twenties. During the Roaring Twenties, production was high, spending was high, and the Stock market increased by over four hundred percent. By 1929, stocks were overpriced, factories were overproducing goods, and bad credit all climaxed with the collapse of the American economy. By the time the United States realized what was wrong the economy was plunging with no end in sight. In an attempt to prevent the collapse JP Morgan invested one hundred million dollars into the stock market to try and calm people and prevent selling.
In Addition to maldistribution stood the credit structure of the economy, some farmers were in deep land mortgage debt, so they lowered their crop prices in order to regain credit, and because the farmers were no longer accountable for what they owed banks. Across the nation the banking system found themselves in constant trouble. In America both small and large bankers were concerned for their survival, so they began investing recklessly in stock markets and granting unwise loans. These unconscious decisions would lead a large consequence, such as families losing their life savings and their deposits became uninsured. “ More than 9,000 American banks either went bankrupt or closed their doors to avoid bankruptcy between 1930 and 1933.”Although
When the stock market crashed many were unable to pay their debts not only to their stock purchases but also to their banks. Without payments to the loans given out, banks began to fail. Additionally, the gap between upper and lower classes greatly widened, which only increased the economic issues. On top of everything occurring, a drought developed in the Great Plains that created the “Dust Bowl” and destroyed the agriculture business. The sources of downfall in the Great Depression can be traced to the stock market failure, bank failure, farm failure, and job market failure.
Cornelius Vanderbilt saw the trouble coming. By 1873, the 79-year-old "Commodore," as he was called, was no stranger to risk: calculated bets with steamboat and railroad companies had made him by far the richest man in America. But he was wary of overexpansion by the railroads in the West, skeptical of economic weakness abroad and loose credit at home, and disdainful of the new "gang of stock speculators in Wall Street"—which included some of his own clan. When big banks began to fall on Sept. 18, 1873, he immediately understood what was wrong. "There are a great many worthless railroads started in this country without any means to carry them through," he told a reporter that evening.
Although the 1920’s were booming and prosperous, the United States soon entered a prolonged economic depression. In October of 1929, prices in the stock market began an uneven downward slide (Document 2). As investors decided that the previous boom in the stock market was over, they sold more stock, thus causing the declination to increase even further. Many citizens of the United States were greatly affected by this. Families who had invested in stock lost most, if not all, or their life savings.
Leuchtenberg sad, “There was no single cause of the crash and ensuing depression,” [Doc2]. Many things as stated earlier contributed to the crash, such as overexpansion of credit, goods, industries and rising rates of unemployment. Many Americans saw the Stock Market as an easy way to create wealth by buying stocks cheap, usually at a margin, and selling for a higher price, hopeful to profit. Buying on margin was the act of paying some money on a stock, but loaning the rest from a bank who expected would be paid back when profit was made. Stocks became more expensive to the point where nobody wanted to buy them because of their extreme price.
The American economy suffered this vast plunge because speculation in the stock market, maldistribution of income, and overproduction of goods. For the duration of this time period, the purchasing of stocks became very popular,
The Stock market Crash was one of the causes of the Great Depression. One cause of the Stock Market Crash was the stock exchange. This led thousands of Americans to invest in stocks and lose money. Many Americans borrowed money from the bank to buy stocks. Most of the time, people who lost money were unable to pay the banks back their debt; which caused banks to fail.
The Great Depression was a severe worldwide economic depression that took place during the 1930s. The article by Edwin Gay and pictures compiled by Cary Nelson are both descriptions of how the Great Depression was and the several impacts that it had on the American economy. The range of the great depression is unprecedentedly wide according to Edwin Gay. The great depression was believed to have started from the collapse of the US stock market in 1929. This was shown in a picture as compiled by Cary Nelson
People trusted the “Buy now, Pay later” idea, so much so that they bought so much, and didn't have enough money to pay later. The distribution in income was only favorable for 40% of the entire population, and the citizens were gambling on their stock investments and thought nothing could go wrong. Imagine it is October 28, 1929, living a lavish lifestyle in your mansion, only to have the all of the dreams that came true crushed the very next
half of its value in a month (Oakes 719). During the 1920s, the shift from an agricultural economy to a consumer goods based economy was taking place (Oakes 719). The shift caused crops to be valued very low, causing many people being to be unemployed, spending of what little savings they had, and then relying on “rickety credit and financial systems” (Oakes 719-720). Something very similar can be observed between the cause of the great depression and the most recent economic disaster. In both disasters, banks made risky investments or gave out risky loans, which lead to a much more disastrous financial meltdown (Oakes 720).
First of all, one of the most diversity factor of the economic was the Stock Markets. During the 1920, the nation stock growth bringing an increased demand for American goods and speedy industrial growth. Things were looking good for the United States during the roaring twenties. The Stock Market crash of 1929, led to the ruin of many Americans and was followed by the great depression. The Great Depression witnessed the end of the economic boom in the 1920 's. crash of the stock market in 1929 causes a lot of damage to businesses and other.
America had experienced other depressions or “panics,” but none were like the Great Depression. The Great Depression began on October 29, 1929, Black Tuesday, with the stock market crashing. Most people believe that the cause of the Great Depression was the stock market crashing. Although that is what triggered the Great Depression there were many underlying causes that lead up to the stock market crashing. Some of the underlying causes include under-consumption/over-production, uneven distribution of wealth, loose banking and corporate regulations, tariffs policies, and the stock market.
In 1929, the U.S. was hit with the worst economic crisis in the history of the country, the Great Depression. The Great Depression left millions of people unemployed and cost millions their life's savings. The Depression lasted for ten long years for the American people. Since the Great Depression ended, people have studied it, trying to figure out what happened that started it all. The problem was, in fact, the poor economic habits of the people at the time, such as speculation, income maldistribution, and overproduction.
And to cover up the expense the banks have to get the money from the interests they get on loans. The banks also gave loans to the stock market brokers and as the stock markets failed the bank couldn’t get the moneys back as a result they failed. And this bank failure along the stock market crash caused a great harm to the Us economy. During the mid 1920s the stock market went through
