The Great Depression

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1929 is a year that most of our grandparents or great-grandparents remember, as it was a year when one of the most significant events occurred in the history of the United States and affected other nations globally.It was the year the Great Depression began.Preceding this great event in our history was a time where businesses were laissez – faire, markets were independent of government interference, monopolies were free and taxes were severed.Inequality of income and wealth increased, government tariffs and regulations pierced through America's foreign market and hardly any modification by the Federal Reserve was made toward the money supply.Inevitably, these measures would lead the causes of the Great Depression.Although the causes are greatly debated, certain causes are most notable.Causes such as false prosperity, the stock market crash, the banking crisis, unemployment and trade collapse are significant in understanding such a historical event.
FALSE PROSPERITY.False Prosperity prior to the Great Depression referred to a false sense of the economy thriving.Many individuals borrowed money strictly to get a piece of the stock market action.In the middle of the year 1928, borrowed money from loans was only five million dollars this number would increase to eight hundred fifty million dollars in September of 1929.People used the borrowed money to purchase stocks, and then applied those stocks as collateral to purchase more stocks.This repetitive cycle caused the stock market to become incredibly unsteady because the money invested was based on borrowed money and false optimism.This caused investors to lose confidence in their stocks and, ultimately, would soon cause the stock market to collapse.
The economy at this time was very unstable due to the unequal distribution of wealth.A majority of the wealth was attributed to about the top 5 percent.This accounted for 33 percent of the national…