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The US Social Security Administration And The Great Depression

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The Great Depression was a financial crisis that began in 1929 and lasted until 1939. Prior to The Great Depression, the financial markets were booming in America during the period known as The Roaring 20’s. Share prices rose tremendously in throughout the 1920’s; according to the Federal Reserve History in their article Stock Market Collapse of 1929, economist Gary Richardson and collogues explain the Dow Jones Industrial Average increased 600% between August 1921 and September 1929 (Richardson et al. 2013). The Dow Jones Industrial Average is a stock market index for 30 large corporations. The Great Depression began in September 1929 when the stock market plummeted. The Federal Reserve History describes that the stock market collapse started …show more content…

According to the US Social Security Administration, in the article The Depression, banks held large portions of their assets in the stock market during this time (US Social Security Administration). When the market plummeted, their assets did too. This created an insolvency and liquidation problem with these banks. The Social Security Administration describes the public lost confidence with the banks, which led to bank runs across the country. Depositors went to the banks in mass to pull their funds out of the bank, since the banks were facing insolvency and liquidation problems due to the failing market, they did not have the funds on hand to pay back to the depositors. The Social Security Administration notes that 9,000 banks failed during this period and defaulted on $7 billion of deposits. There was no deposit insurance during The Great Depression, so the depositors lost their …show more content…

He explains that the Federal Reserve allowed the money supply to fall during this time because they did not implement monetary policy in time to prevent the fall in money supply (Fishback 2010). Between 1929 and 1933 Fishback explains that the Fed raised the discount rate and made open market sales of bonds to lower the money supply. The Fed could not increase money supply at this time because they were still using a gold standard for the monetary system. In 1932 the Hoover administration increased federal spending and federal lending through the Reconstruction Finance Corporation (RFC). Price Fishback explains that the RFC was a government financial institution that lent funds to banks and other financial institutions. It is noted that the RFC made $784 million to 4,000 banks during 1932 to prevent these banks from failing. After the Roosevelt Administration took office in 1933, they removed the United States from the gold standard; shortly after the U.S. Fed decreased the discount rate to provide liquidity to banks; by 1937 the discount rate was at 1%. This helped the country recover from the

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An incredibly devastating time for many Americans, the early 1930s introduced the country to the nightmare that was the Great Depression. Sparked by the Stock Market Crash that took place on Monday, October 19, 1929, the Great Depression was the most severe economic downturn in American history. On that infamous Monday alone, investors lost 14 billion dollars and by the end of the year their losses had tripled.   In the 1920s, it was estimated that four to five banks opened up around the country on a daily basis.

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It also goes into detail about what this event led to, stating that “nearly 11,000 banks closed, and some people lost all of their money” (Cobb). The rate of people losing their jobs was so great, “1 in 4 Americans had no job during this time” (Cobb). Furthermore into the topic of The Great Depression, history.com also includes information on how the Great Depression came to be.

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The great depression in the US, which began in 1929, and ended in 1938 was caused by many different things all happening at the same time in the economy. The wall street crash in October 1929 was one of the main causes, when the stock markets crashed. This was caused by many things, but the main reason for it was a deflation (which is an event where the general level of prices in an economy are reduced) On October 24th (black Thursday), share prices dropped by 14 billion dollars in a day, and more than 30 billion in a week. This forced many of the banks to close, due to them investing their client’s savings in the stock market.

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Because the stock market crashed, thousands of individual investors lost their jobs. The decline in the value of assets also greatly strained banks and other financial institutions, especially the ones holding stocks. By 1933, nearly half of America's banks had shut down. Unemployment was going sky high. 15 million people were without jobs.

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After the Great War (1914-1919) came the “Roaring Twenties” followed by the Great Depression (1929-1939). America became the richest country in the world at that time after WW I. Then on October 24th 1929 the stock market crashed and America experienced the Great Depression a few days later on October 29th 1929 . Some of the contributing factors of the Great Depression were 1. The crash of the Stock Market on Black Tuesday 2.

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The Great Depression was an enormous economic downfall in the history of the United States and was also a very hard time for many Americans. People had lost jobs, markets went bad, banks had shut down, and unemployment rate has gone up. It had lasted from 1929-1939. During the next several years, buyer spending and investment had dropped, causing a decline in industrial output and raising the unemployment level. It began with the stock market crash on October 29 1929, which had lost millions of investors, markets had lost $30 billion dollars in two days, making it ten times more than the annual budget the U.S had spent for WWI, and prices were dropping until the end of November.

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Since the money was tied to gold reserve, and the amount of this metal was limited, there occurred a shortage of money, and hence the shortage of effective demand for goods and services. Further, in the chain reaction: a sharp drop in prices for goods (deflation), bankruptcy of enterprises, unemployment, protective duties on imported goods, fall of consumer demand, and a sharp drop in living standards. before the beginning of the Great Depression the rate of the U.S. gold reserve growth was slower than the development of economy. This led to the emergence of hidden inflation, as the government printed new money for the rapid growth of the economy. Thus, as Edsforth states the dollar’s gold supply was undermined, the budget deficit grew, and the Federal Reserve System lowered the discount rate.

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Bank deposits were not safe to be used because the banks failed people and thus people simply lost their savings. Banks that were still there were unsure of the economic situation and they were only concerned for their own survival and this caused them to stop giving more loans causing a decrease of the people using them. How the situation was resolved? There was a new deal that had been presented.

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As President Hoover was in office, as well as when he left office, banks were failing across the United States. President Roosevelt and Congress immediately passed legislation to solve the banking crisis. Roosevelt closed all the nation's banks so that the Federal Reserves could help strengthen them and restore confidence in the banking system. This resulted in the creation of the Federal Deposit Insurance Corporation, also known as the FDIC. This was used as a way for the government to guarantee savings deposits for all Americans.

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The Great Depression started in 1929-1939 and lasted for a decade. The cause of the Great Depression was the market crash. Americans were eager to get rich quickly so they started to buy stocks on margin but the plan backfired. Investors began to worry that the stock prices would fall so they began to sell off their stocks. Those who lent money depended to repay their loans.

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There were far too many independent banks during the period of the Great Depression, and the problem with the surplus of independent banks was the lack of support they could provide each other. The Run on the Banks resulted in the fall of banks, and an overall lack of confidence in the banking system. The overuse of credit in the economy helped trigger the run on the banks by people taking out loans from banks and then not being able to afford the continual payments, leading them to withdraw their money and shut down the banks. The Stock Market Crash was also a major factor in the start of the Great Depression. People who were buying into the stock market were gambling their money into the stock market in the hopes of making a quick profit (B).

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The Great Depression was an economic crisis in the United States from 1929-1941. The Stock Market Crash was one of the primary reasons that caused the Great Depression. The Stock Market Crash was caused by too many people withdrawing their money from banks at the same time. This happened because they heard that banks were going to close and they didn’t want to lose their money because of that. Banks needed people’s money to use for investments and since they didn’t have any, banks began to close.

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The Great Depression in the United States began in August 1929, when it first went into a recession. The country was already in a two months economy decline when Wall Street crashed on October 29,1929 (also known as Black Tuesday). The world would eventually feel the full effects of a global economic downturn. The market crash displayed the beginning

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In 1929, there was a loss of over $25 billion, and a significant number of people were in debt. Due to a lack of money, payments for necessities or basic needs like food, mortgage installments, and other purchases were impossible to afford. Furthermore, widespread unemployment resulted in bank closures due to people taking all their money out of there. All of this contributed to the stock market crash, which caused the Great Depression. It lasted a decade, during which many people struggled to make purchases that would ensure their survival.

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From 1929 to 1933, more than two-fifths of the nation’s 24,970 banks disappeared through failure or merger Robert J. Samuelson: Revisiting The Great Depression; page 15). Banking panics began as large numbers of investors lost confidence in their banks and demanded deposits in cash. As more banks went bankrupt, it only increased the panic and the demand for Americans to withdraw their money from the banks because they did not trust them. In addition to the banking crisis around the country, banks reduced lending and there was a fall in investment.

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