The Great Depression In America Essay

2946 words - 12 pages

There were many primary causes for The Great Depression, Unequal distribution of money to the economy,
and the stock market speculation, and much more which all played a major factor for The Great Depression.
The Great Depression impacted everyone, it impacted different people of all kinds of backgrounds.
It was a low time for Americans in the 1920's, and for other countries also.

One of the causes were Uneven Prosperity, 0.1% of families made 100,000$ a year, and 80% had zero savings. 200 companies controlled 49% of all U.S industry

which caused uneven prosperity. Although the economy was booming in the 1920's most purchasing was done by credit.
U.S wealth was not spread evenly and the economy was unstable. The U.S. economy was booming in the 1920’s and Uneven prosperity made recovery difficult.

People were buying thousands of shares of stock for as little as 10% down. Then people lost ten times as much as they put in.For the economy to function properly,

total demand must equal total supply. In the 1920's there was an oversupply of goods. 60 percent of cars and 80 percent of radios were bought on credit. The U.S.

economy was also reliant upon luxury spending and investment from the rich to stay afloat during the 1920's. The significant problem with this reliance was that luxury

spending and investment were based on the wealth's confidence in the U.S. economy. imbalance of wealth lead to large market crashes.

Black Tuesday, 1929. People saw stocks were actually falling. People hurried to get out of stocks and minimize their losses. As this happened, more people did the

same which exacerbated the situations. On Black Tuesday, a record16.4 million shareds were sold. This led to bank failures. Many people lost as much as ten times

their initial investment in the crash of Black Tuesday

Speculation in the 1920s caused many people to by stocks with loaned money and they used these stocks as collateral for buying more stocks. The stock market

boom was very unsteady, because it was mostly borrowed money and false optimism. When investors lost confidence, the stock market collapsed, taking them along

with it.People loss confidence and since they were developing mistrust of the economic situation, many wanted there money out of banks and buried in their yards.

The same thing that happened to the stock market. Banks ran out of cash and went bust. Few economic barriers existed to prevent total collapse. The banks that

did survive had to foreclose on a number of loans, collecting cars, land, and houses that nobody had the money to buy from the banks. As a result, these banks ended

up with tons of property but no way to get cash from it. This cash shortage closed even more banks.
With the economy falling in shambles and companies defaulting on loans, nearly all private and corporate investment ceased. Companies couldn’t afford to

expand—in fact, many had to consolidate in order to cover the margins on their loans. In...

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