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Causes And Effects Of The Great Depression In America

3738 words - 15 pages

Few Americans in the first months of 1929 saw any reason to question the strengthand stability of the nation's economy. Most agreed with their new president that thebooming prosperity of the years just past would not only continue but increase, and thatdramatic social progress would follow in its wake. 'We in America today,' HerbertHoover had proclaimed in August 1928, 'are nearer to the final triumph over poverty thanever before in the history of any land. The poorhouse is vanishing from among us.'1In mid-October, 1929, the average middle-class American saw ahead of him anillimitable vista of prosperity. I newly inaugurated president, Herbert Hoover, hadannounced soberly in the previous year that the conquest of poverty longer a mirage: 'Wehave not yet reached our goal, but given a chance to go forward with the policies of thelast eight years, and we shall soon with the help of God be within sight of the day whenpoverty will be banished from the nation.' This was the economic promise interwovenwith what a popular historian would call the American Dream. More complacently,Irving Fisher and other economists in the confidence of Wall Street assured the citizenthat he was dwelling upon 'a permanently high plateau' of prosperity.2Only fifteen months later, those words would return to haunt him, as the nationplunged into the severest and most prolonged economic depression in its history. It beganwith a stock market crash in October 1929; it slowly but steadily deepened over the nextthree years until the nation's economy (and, many believed, its social and politicalsystems) approached a total collapse. It continued in one form or another for a full2decade, not only in the United States but throughout much of the rest of the world, untilwar finally restored American prosperity.3In the autumn of 1929, the market began to fall apart. On October 21, stock pricesdipped sharply, alarming those who had become accustomed to an uninterrupted upwardprogression. Two days later, after a brief recovery, an even more alarming decline began.J. P. Morgan and Company and other big bankers managed to stave off disaster for awhile by conspicuously buying up stocks to restore public confidence. But on October 29,all the efforts to save the market failed. 'Black Tuesday,' as it became known, saw adevastating panic. Sixteen million shares of stock were traded; the industrial indexdropped 43 points; stocks in many companies became virtually worthless. In the weeksthat followed, the market continued to decline, with losses in October totaling $16 billion.Despite occasional hopeful signs of a turnaround, the market remained deeply depressedfor more than four years and did not fully recover for more than a decade.4The sudden financial collapse in 1929 came as an especially severe shock because itfollowed so closely a period in which the New Era seemed to be performing anotherseries of economic miracles. In particular, the nation was experiencing in 1929 aspectacular boom in the...

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