Great Depression

Jerry Phillips

April 16, 2008

The Great Depression

Many factors played a role in bringing about the depression. However, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's and 30's, and the extensive stock market speculation that took place during the 1930's. These were not the only factors of the great depression, structural weaknesses and the fact that most of the other countries were affected just kept the depression going were also played a part. The resulting period ranked as the longest and worst period of high unemployment and low business activity in modern times. The Great Depression was the worst economic slump ever in U.S. history, and one that spread to virtually the entire industrialized world. Banks, stores, and factories were closed and left millions of Americans jobless, homeless, and penniless. Many people came to depend on the government or charity to provide them with food. It led to a sharp decrease in world trade as each country tried to protect their own industries and products by raising tariffs on imported goods. The economy continued to fall almost every month.

At first the stock market was an important but not the dominant influence. But however, by 1929 the market became the symbol of the nation's prosperity and an icon of American business culture. Everything was going great; the stock prices reached what looked to be a permanently high plateau. In September of that year the market began to slide, but people ignored the sign. But on October 29, 1929, "Black Tuesday", the stock market took a huge fall. More than 16 million shares changed hands in frantic trading. Investors soon realized they were heavily in debt so they started to sell their stocks, which led to others doing the same. That was the start of all the panic, everyone started selling but most of them couldn't find buyers. The impact of "Black Tuesday" led to bank failures because speculators who had borrowed from banks to buy their stocks could not repay the loans because they could not sell their stocks. This was the main start of the depression, because it not only wiped out the savings of thousands of Americans, it hurt commercial banks that had invested in the corporate stocks. Many of the middle class people lost their life savings and had no other way to cope with the crisis. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe.

In the American economy, agriculture was in the worst shape. The farmers had still not fully recovered from the recession of 1920-1921, which made it worse. All the farming equipment was really expensive now and mortgage incurred during the inflationary