Essay Option #3
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The Great Crash can be considered one of the worst economic cases in the history of the world. It began on Thursday of October 24, 1929, when skittish investors were trading 12.9 million shares. Four days, later, it was on a Monday, Dow Jones Industry plunged almost 13 percent. The day was dubbed “Black Tuesday,” the market fell by 12 percent. This sent shock across the financial world and posted numerous signs that a market crash was on its way. The Great Crash put the whole country on its knees. Multiple factors led to the Great Crash. However, it is difficult to determine if these factors were preventable or not.
One of the causes of the “Great Crash” was the occurrence of a peak in the stock market before the crash. Before the crash, there was a rapid expansion in the U.S market, and the markets hit high records. For this reason, the Dow industry increased six-fold for eight years in a row. Due to these top records, investors such as Irving Fisher concluded that the stock prices had reached ‘a permanently high plateau.” In the 1920s, the economic climate was healthy, and there were low unemployment rates. Many American ordinary working-class had subscribed to the idea of investing in stocks, and some of them bought “on margin” which means that they paid only a tiny value percentage. They borrowed the remainder from banks and brokers.
Another factor for the Great Crash is the overconfidence of the market and the public. Experts contend that the fact that the stocks were overpriced, the collapse of the market was imminent. The other major factor is the fact that people purchased shares with easy credit. The growth of easily acquired loans made people unafraid of debt. This was also because they were encouraged by the stability of the market.
The impacts of the Great depression to the lives of Americans were devastating. About a quarter of the U.S workforce was unwaged. Even the upper and middle professionals, including doctors and lawyers, had their income drop by close to 40 percent. Also, the families that enjoyed financial security, all of a sudden started experiencing economic instability. Generally, the typical American family did not have extra money that they could spend on leisure. For instance, before the depression, spending time at a movie theatre was standard, but during the depression, this was a luxury that could not be afforded easily and only a few could.
Both President Hebert Hoover and Roosevelt put on significant but differing measures in response to the great depression. President Hoover responded by his philosophy of limited government intervention. Hoover believed that if the government has excessive interference, it will pose a threat to capitalism and individualism. President Hoover perceived that it would be wise if any support offered should be handled on a local and a voluntary basis. President Roosevelt, on the other hand, responded to the great depression by authorizing a sequence of economic measures dubbed the “New Deal.” These measures concentrated on relieving unemployment and poverty, recovering the economy to a more stable level and reforming the existing economic system to prevent the country from sinking to another depression.
References
Waxman, O. (2019, October 24). What caused the stock market crash of 1929—And what we still get wrong about it. Retrieved from https://time.com/5707876/1929-wall-street-crash/
Argersinger, J. A. E. (2017). Toward a New Deal in Baltimore: people and government in the Great Depression. UNC Press Books.