As our economy began to falter in December 2007 and plummeted into the current recession in September 2008, many Americans thought back to the horrors and hardships of the Great Depression. The Great Depression proved a difficult time for America, a time nobody wanted to ever see again. Sadly, many of the children from the Great Depression have lived to witness a time with many similarities, and yet many differences, to the economy crash of 1929.
The stock market crash on October 29, 1929 set in motion many events leading to the Great Depression. Although this day is considered the trigger to the massive economic fallout, the American and global economies had been in turmoil for six months prior to Black Tuesday, and many other factors contributed to what’s known as the worst economic crash in modern history.
With few regulations on the stock market in the years leading up to the Great Depression, investors were able to buy stocks on margin, only requiring them to put down ten percent. This caused for wild speculation, and many people funneling their life savings into the stock market, which led to artificially high prices. After Black Tuesday, many people began to believe that the banking system in America was going to fail. Thousands flocked to the banks to withdraw their money. With so much output, and so little input, banks nation-wide began failing. In the first eight months of 1930, seven hundred forty-four banks went under.
During the 1920’s only one percent of the population owned forty percent of the nation’s wealth. But when the stock market crashed, the rich entrepreneurs, and the lower class citizens alike, lost everything, and the unemployment rates soared. Not only was high unemployment rates caused by the stock market crash, but also from the famous drought, known as the Dust Bowl. The previous fertile lands of the Mid-west were no longer arable. Most farmers were not able to grow enough crops to sustain their families, much less obtain any sort of profit, so they packed their bags and headed for the cities in search of work. By 1933, unemployment rates were at twenty-five percent. Throughout his term, President Hoover made no attempts to assist the economy or prevent more damages, but when Franklin Rooselvelt was sworn into office, he immediately began putting regulations in place and attempting to help the economy with projects such as the New Deal. Overall, the Great Depression a terrible period of time for the United States, brought on by many different issues, but only solved by another terrible period – World War II.
Almost exactly eighty years later, the United States has fallen into another economic crisis, not quite as terrible as the Great Depression, but showing many of the same mannerisms. In the booming housing market years of 2003-2007, banks financed many risky loans for as much as one hundred ten percent, speculating that the value of the houses market would continue to rise. These were jeopardous actions...