The Causes of the Great Depression :: American America History

The Causes of the Great embossmentSince 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 dreaded or lasted as long as the Great Depression. Only as the economy shifted toward a war mobilization in the late thirty-something did the grip of the depression finally ease. Stock prices had been rising steadily since 1921, tho in 1928 and 1929 they surged forward, with the average price of farm animals rising over 40 part. The stock market was totally unregulated. Margin grease ones palmsing 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 trusty investors into the stock market. The Federal Reserve board warned member banks not to bestow money for stock speculation because if prices dropped, many investors would not be able to pay back their deb ts. No one listened. The stock market began glide in early September, but hoi polloi ignored the warning. Then on black Thursday (October 24, 1929) and again on black Tuesday (October 29, 1929) the ball dropped. more(prenominal) than 28 million shares changed hands in frantic trading. Overextended investors, suddenly decision themselves in heavily in debt, began selling their stocks. Many found that no one would buy anything at any price. Overnight, stock values cut from a peak value of 87 one million million million dollars to 55 billion dollars. The crash was felt far beyond the trading floors. Speculators who borrowed money from the banks to buy their stocks could not repay the loans because they could not sell stocks. This caused many banks to fail. Since bank deposits were uninsurable before the 1930s depositors their money, which in many cases was all that many people had. The stock market crash intensified the course of the Great Depression in many ways. Besides wiping out the savings of thousands, it hurt mercenary banks that had invested heavily in corporate stocks. It also caused a loss of confidence in the market prolonging the depression. The downturn began slowly and almost unnoticeably. After 1927, consumer using up declined and housing construction slowed. Inventories piled up, and in1928 and 1929 manufacturers began to cut back on production and coiffure off workers. Reduced income and buying power in turn reinforce the downturn. By the summer of 1929 the economy was clearly in a recession.