The Stock Market Crash Of 1929 And The Ensuing Depression Essay
The stock market crash of 1929 and the ensuing depression were caused by a multitude of different factors, but three stand out; production capability gradually outgrew consumer demand for goods, wealth was unevenly distributed, and speculation in the form of investing in the stock market increased substantially. These factors would combine to create the Great Depression and plague President Herbert Hoover’s administration as they tried, unsuccessfully, to return the country to its previous state of prosperity.
Increased production capability of durable goods like automobiles and household appliances was contrasted by lowered demand. Since these goods were built to last for long periods of time, the need for newer versions of cars or fridges lessened and, starting in 1924, the rate of sales increase of these products would drop yearly (Divine 750). The drop led to a small recession in 1927.
During the 1920’s (much like today) there was a gross disproportion in wealth distribution. While business profits rose by 68%, wages of industrial workers only increased by 11% despite productivity going up 43% (Divine 752). If an adequate amount of the prosperity was shared by the workers instead of being funneled toward shareholders’ dividends and industrial development, consumer purchasing power could have been bolstered and evened out production demand and supply (Divine 752-753). Also, if wages were higher, the popularity of buying goods on credit may have waned…