Crash Of The Late 1920s Preventable Essay

Was the crash of the late 1920’s preventable? I believe that it was preventable. Despite the outstanding performance of the stock market during that time, several mishandled factors lead to the severe downward spiral and crisis of the American economy. The lack of diversification, poor credit structure and unstable international debt structure were my top three choices of the Great Depression that I felt could have been managed more effectively than the other postwar issues involved. In the 1920’s, lack of diversification resulted in success heavily depending on simple trades, particularly to automobiles and construction. Unfortunately, production costs started to drop to over $2 billion within three years (from 1926 – 1929) and car sales plummeted to approximately 33% in the first nine months. As new businesses in electronics, plastics, chemicals and petroleum were beginning to surface to pick up the slump, none of them were strong enough economically to repair the damage. Therefore, the government’s lack of investment toward the growth of new trade and industry areas, and timing of the economic collapse were …show more content…
The United States allies, who consisted of all of the European countries, including the Central Powers owed excessive amounts of money to American banks. Unfortunately, the European nations’ devastated economies could not cover the debt. Therefore, the American banks provided larger loans to cover these obligations but it contributed to the crisis by piling up yet new and greater debts. American tariffs were also making it impossible for Europeans to trade their goods in American markets, one such tariff – the Hawley Smoot Tariff - established high import duties and contributed to the disintegrating chain of world trade. Consequently, the European nations began to default on their loans due to the lack of foreign exchange to repay