In the historical perspective; The stock market in the united states crashed on the thirtieths of October in 1929 which came to be referred to as black Tuesday. It was not another black Monday we have come across in the stock exchange market. This crash led to this great catastrophe that in future was to be referred to as the Great Depression. The consequences of this event was equivalent to years of devastation,joblessness, homelessness and the liquidation of millions of dollars. The Dow Jones Industrial Average that measures most of the country’s stock markets declined by nearly 90% from its initial level.
Key Points
The Great Depression started with the stock market crash on October 29, 1929 (Black Tuesday).
The Dow Jones Industrial Average fell by nearly 90%, leading to massive losses in wealth.
People had borrowed money to buy stocks, which caused a financial bubble that burst in 1929.
Banks failed after the crash, causing many people to lose their savings.
Unemployment reached about 25% by 1932, with widespread homelessness and poverty.
The crash led to factory closures, layoffs, and a major decline in consumer spending.
President Franklin D. Roosevelt introduced the New Deal in 1933 to create jobs and reform the economy.
Public works projects and the creation of Social Security helped ease some of the economic pain.
World War II, by boosting industrial production and job creation, ultimately ended the Great Depression.
The Depression led to long-lasting changes in banking regulations and government involvement in the economy.
Why Did the Great Depression Happen?
Business had been on the rise during the 1920s. It is noteworthy that people were getting rich buying stocks. There was he said that many people believed that the good times would never come to an end again. However reality was quickly fading from the picture. Most investors invested their money in stocks through the purchase of shares on credit in the belief that the market would in fact continue to rise. This created a bubble. But factories at the same time, were churning out goods which the citizens were not in a position to purchase. People’s wages were not increasing the way they were being paid more for goods and services Thus, the quality of life was declining.
The economy was unable to support the situation in question any longer by the year 1929. The market, you know collapsed — it was like a house of cards coming crashing down. Shares turned to liitle paper, effective at once and everyone panicked. Market traders were frantically trying to unload their shares but no one will buy it. This led to a marked lot of wealth been lost.
How the Stock Market Crash Triggered a Global Crisis
Contrary to popular belief the stock market crash of 1929 was not a concern limited to the wealthy Mr. Carmichael. It affected everyone. People had borrowed money from banks to invest in securities and when these securities turned into virtually valueless paper, the banks were unable to recover their money. A lot of banks collapsed, including those in the developing countries, and anyone who had deposited his savings in those banks lost all the savings.
Companies’ failed to access credit facilities to continue their operations. This led to layoff, factory closures and a very sharp increase in unemployment in the economy. Results indicate that by 1932, a quarter of the population of the America was unemployed. Sometimes it was even worse in some cities. Soup kitchens and breadlines appeared on many streets as the population tried to survive. People could not afford to pay rent or their monthly house payments, so they lost their homes. The effects were devastating.
Consequently, this paper aims at evaluating the immediate effects of the Great Depression. The Great Depression arrived black and severe. The rate of unemployment grew rapidly and touched it’s the highest point of 1933. Those who used to rely on their stable and steady source of income lost their jobs and they had no one to turn to. The homeless were on the rise, and so were the people who had to beg for food and shelter. Farmers also who in general had food for themselves had their own difficult times through out. People got poorer and prices for crops dropped so low that it began to cost more in order to grow crops than to sell them in the market.
Agrit in the country worsened as businesses closed down their operations. Every shop, be it large company or a small local store, would obviously be dead without customers. There were no sales, and firms could not even feed their employees. It was a vicious cycle.
The Great Depression (1929) A Look Back at the Worst Economic Crisis
Government Response: The New Deal and Its Impact
President Herbert Hoover Of the United States of America was in power when the crash occurred; he attempted to intervene but failed to arrest the decline. At this time, some people accused him of the bad period. In the year 1933, Americans voted for Franklin D. Roosevelt. They include; In order to arrest the situation, he devised what is known as the New Deal. This was social programs aimed at assisting people to stand up once more and thus each to help reconstruct the economy.
New Deal provided employment by beginning government-sponsored activities such as construction of roads, bridges or schools. It also created the agency for creating Social Security – at least people would have some money in the old age or in the difficult economy. It didn’t bring the Great Depression to an end but did attempt to make things slightly better.
How did two world war II bring an end to the great depression?
While the New Deal aided somewhat the economy did not fully recover until World War II. There was a large and escalating need for weapons, planes, ships and other products in the war. Factories needed thousands of workers to match this demand which helped people get back to work and currencies in motion again. In an absolutely paradoxical manner the war effectively ended the Great Depression as the economy of the United States received a kick-start.
How the Great Depression Changed Society
Society had suffered a serious blow because of the great depression. The money became a little more tighter and there was hardly any confidence in the banks. ,the government stepped in time and we see that the government took a bigger part to play so that anything like this does not occur again. New legislation was introduced to prevent the same from happening to the banks.
The experiences from The Great Depression are still relevant even to this generation of managing economies. That is why they say, too much of anything is not good, especially when coupled with greed and too much debt, and no supervision. Depression was an age of incredible hardship, still it is possible to draw attention to the fact that in every person, there is an urge to survive and move forward.
Finally, one can note that the Great Depression was not only a crisis in finance. It was a period that put to scale millions of individuals, and it reformatted the contemporary world that the citizenry now confronts.
I a finance writer with 2+Year of Exp in financial topics. With BBA in Finance degree, content writer, SEBI-certified investor, and stock market enthusiast.
