Essay on The Causes of the Great Depression - 1002 Words

Since the beginning of the Industrial Revolution early in the nineteenth century the United States ad experienced recessions or panics at least every twenty years. But none was as severe or lasted as long as the Great Depression. Only as the economy shifted toward a war mobilization in the late 1930s did the grip of the depression finally ease. br brStock prices had been rising steadily since 1921, but in 1928 and 1929 they surged forward, with the average price of stocks rising over 40 percent. The stock market was totally unregulated. Margin buying in particular proceeded at a feverish pace as customers borrowed up to 75 percent of the purchase price of stocks. That easy credit lured more speculators and less creditworthy investors†¦show more content†¦After 1927, consumer spending declined and housing construction slowed. Inventories piled up, and in1928 and 1929 manufacturers began to cut back on production and lay off workers. Reduced income and buying power in turn reinforced the downturn. By the summer of 1929 the economy was clearly in a recession. Although the stock market crash and its immediate consequences contributed to the Great Depression, longstanding weakness in the American economy accounted for its length and severity. Agriculture, in particular, had never recovered from the recession of 1920-1921. Farmers faced high fixed costs for equipment and mortgages incurred during the high inflationary war years. At the same time prices fell because of overproduction, forcing farmers to default on mortgage payments and risk foreclosure. Because farmers accounted for about one-forth of the nations gainfully employed workers in 1929, their difficulties weakened the general economic structure. Other industries also had experienced economic setbacks during the prosperous 1920s. The older industries such as textiles, mining, lumbering, and shipping faltered, newer and more successful consumer- based industries, such as chemicals, appliances, and food processing, proved not yet strong enough to lead the way to recovery. br brThe nations unequal distribution of wealth also contributed to the severity of the depression. During the 1920s the share of the national incomeShow MoreRelatedCauses Of The Great Depression1319 Words   |  6 Pageshaving classic satisfying life concluded when the Great Depression ushered in the negative trend that would impact the U.S. economy in 1929. Therefore, what happened? In this essay, we will discuss what the Great Depression was for the Americans, the causes of the Great Depression, and the U.S.’s recovery from the Great Depression. The Great Depression One of the terrifying times in the U.S. history is the Great Depression. 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The great depression started in 1929Read More The Cause of the Great Depression Essay552 Words   |  3 PagesThe Cause of the Great Depression The economic expansion of the 1920’s, with its increased production of goods and high profits, culminated in immense consumer speculation that collapsed with disastrous results in 1929 causing America’s Great Depression. There were a number or contributing factors to the depression, with the largest and most important one being a general loss of confidence in the American economy. The reason it escalated was a general misunderstanding of recessions byRead MoreCauses Of The Great Depression And The Great Recession2292 Words   |  10 Pages1. Examine the causes of the Great Depression of the 1930s and consider what similarities and differences can be drawn with the problems from the financial and economic crisis which began in 2008. Introduction 2007-2009 in America has often been described as the worst economic crisis since the Great Depression in 1929. There was lots of debate whether the economy was slipping back to double dip recession but there is considerable evidence that the economic crisis in 2008 is worse than the crisisRead MoreCauses of the Great Depression Essay651 Words   |  3 PagesIn the 1920s, American economy had a great time. The vast majority of Americans in 1929 foresaw a continuation of the dizzying economic growth that had taken place in most of the decade. However, the prices of stock crested in early September of 1929. The price of stock fell gradually during most of September and early October. On â€Å"Black Tuesday† 29 October 1929, the stock market fell by forty points. After that, a historically great and long economic depression started and lasted until the start of