The Causes Of The Great Depression Of 1929-1933

791 Words 4 Pages
The Great Depression of 1929-1933 was the longest, deepest, and most widespread depression of the 20th century. The Great Depression started in the United States, but it rapidly spread worldwide. On October 29, 1929, “Black Tuesday” struck Wall Street, which triggered the Great Depression. Many businesses and farmers were bankrupted thus resulting in more than fifteen million people losing their jobs. In addition, over nine thousand banks failed and personnel income, tax revenues, profits and prices dropped dramatically. Nevertheless, the
Great Depression could have been avoided by the stock market speculation and mass selling, income stratification, the people were spending beyond their means and most importantly, the policy decisions
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Simultaneously, stock prices continued to rise and by the fall of 1929, stock prices had risen to levels that could not be justified by anticipating future earnings. On
“Black Thursday”, October 24, 1929, the stock market crushed. Investors were dumping the stocks collectively. The Dow Jones Industrial Average plunged eleven percent and in addition, a record 12.9 million were traded that day. Millions of shares became worthless. In addition, many investors who bought stocks with borrowed money were wiped out completely. Fifteen
Berglund 2 million Americans lost their jobs, foreclosures and repossessions of homes and businesses increased steadily. Manufacturing output fell and many banks were forced into
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On the contrary, the government should have applied some restrictions to buying on margin and regulated some of the abuses that were pushing up stock prices. In the Roaring ‘20s, many Americans were investing almost all of their money in the stock market. When the stock market crashed, many people saw their investments wiped out and they were left in a state of confusion and shock. The wealthiest American soon became the poorest. Margin is borrowing money to buy securities. In the 1920s, the initial margin was only ten percent and there wasn’t a rule on maintenance margin. The brokerage houses were able to set the margin to whatever they wanted. People were buying stocks with very little money like ten to twenty percent and borrowing the balance from the brokers. Thus, when the stock prices fell, the brokers would issue margin calls which demanded the buyers to pay up with cash immediately or they would likely enter into extreme debt. In conclusion, if the government were to enforce restriction like: people could only be eligible to buy a stock if they could pay at least fifty percent of the stock up front, this would prevent debt and people spending credit rather than money that is actually

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