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The nature and the causes of the Great Depression of 1929 in America.

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1. Introduction The object of this Essay is to examine the nature and the causes of the Great Depression of 1929 in America. The Great Depression was a social and economic depression. "The economic depression began in 1929 and is placed by a variety of sources near to middle of the year. Stock prices, which had increased at a tremendous rate in 1928 and 1929, collapsed suddenly in October; Black Thursday, October 24, 1929, has become the symbol of the depression." 1 1.1. Causes of the Great Depression The new economic era of the 1920�s ended with an explosion of speculations. Since March 1928, the shares of the big American companies like General Motors, Radio Corporation of America, and United States Steel as well as others noted a fast and high increase in their course at the stock exchanges.2 The index of the share-values had almost doubled itself in twenty months. The selling of shares, had been very high through the 1920�s, had brought capital for investments and thus carried the growth of economy. Never before had the share value grown so heavily and so many new shares been put on the market.3 Because of the impression never to lose money, investors became speculators. The steady rising of the stock value impressed the nation that was fascinated by statistics. Rumors were heard about immense fortunes won at the stock exchange.4 The hugest interest lied on airplane building companies and radio producers. But nobody thought about, if the value of shares under the economic situation were justified. After the boom before the crash prices did not rise, but shareholders stayed optimistically. The crash came during October 1929 with frightening speed.2 1.2. The day of the Great Depression began, "Black Friday" In the first week of September the stocks fell, but speculators took advantage to buy at low prices and to make favorable business, and the market recovered again. ...read more.


Through investment-funds and firm unions new shares were created. Only the investment funds spread shares with a value of 8 million dollars. The zeal was only to sell so there would be more money to finance more speculations.4 An easily recognizable reason for the economical difficulties was the lowering of the building activity. In the housing this process began 1928, for industrial building 1928. Through the abnormal building activity of the passed years the market was saturated. The elevation of hypo-bar-pays interest had no effect on the housing construction, but 1928 and at the beginning of 1929 the boom at the stock- exchange moved the States and communities to radical restrictions in their inversions for the infra structure, specially the road construction.2 In the 1920�s these inversions led to the economical growth. Getting stuck it led to shrinkages4 at other industries. The industries, which generally had not taken part of the growth like textile or coal, got as well very early in to trouble. The agronomy got worse suddenly, and the international market collapsed. Big stocks of goods increased. The inequality of the income distribution grew, and that meant the market for the bigger consumer items shrunk. Earnings grew, thus the demand for luxury- articles grew as well but market was saturated quickly. The rest of the earnings went to the stock market. This situation was veiled, through the fact that business was made on credit.1 These were also reasons for the destabilization. After the depression had begun, many products like cars went back to their sellers, because loans were not paid. This resulted in an overflow of cars in the market.4 In the late 1920�s huge uncommonly innovations were done in the sectors of the heavy industry. Soon it was recognized, that new production-installations were made which products could hardly be sold.3 They throttled so the inversions, what led to negative consequences. No rise of consumption was thinkable which could justify such high investments. ...read more.


the New Deal were they had put in so much belief and the entrepreneurs were so upset they left all coalitions.1 The Supreme Court declared it as illegal to regulate the market in with the states and the president lost so this authority, being too big. This interpretation of the constitution threatened all released laws by the New Deal, so Roosevelt answered with a move to the political left. 2.2. Second New Deal and the period until the Second World War Roosevelt stayed president after elections. He took the side of the poor now and not of the entrepreneurs. The Second New Deal was the ongoing reformation and the measures taken against the results of the first.2 The Government left the politic of the NRA, and went on aggressively against the Trusts. But after many mistakes of the government, and controversies about the active role of the United States in the new war, America entered the war against Japan and Germany after an economic breakdown. The American society and economy put themselves fully against Germany, Italy, and Japan what led the country out of the depression.4 3. Conclusion The Great Depression could have been impeded if they were not any corrupt, and criminal people involved in the stock market. World War II was a mile-stone for this crisis giving world economy a new impulse lading as well the world out of it. 4. Sources 1. T. Peter, Did Monetary Forces Cause the Great Depression, New York, Norton 1976 2. Ronald Edsforth, The New Deal America's Response to the Great Depression, Dartmouth College, Blackwell Publishers 2. Rita Barnard, The Great Depression and the culture of abundance, Cambridge University Press, 1995 3. Lyonel Robbins, The Great Depression, London, Maximillian 1934 4. 5. 6. 7. 1 2 3 4 2 See sources 3 See sources 1 4 3 2 2 4 1 3 3 1 2 4 3 4 2 1 4 3 2 3 1 4 2 4 1 1 2 3 4 1 2 1 ...read more.

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