I’m always hearing that the Great Depression was caused by a major drop in the stock market. Well, I never completely understood that, but no teachers ever gave me a good enough answer. How is it possible that everything in the stock market just happens to fail all at once? If there is more to the story then what I’ve mentioned, please explain that also. Thank you.
The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929. Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.
In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the motor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, like the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.
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The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929. Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.
In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the motor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, like the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.
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wikipedia
The banks called in all the agricultural mortgages, and in most cases foreclosed on the farms putting thousands out of work. Some would rightly call it a jewish conspiracy, as it placed all monetary policy in their institutions.
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history
When there was a run on the banks and the deposits were not federally insured then. People lost fortunes when the banks closed.
People were unemployed and businesses were closing and food was not as much in surplus as today.
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their is a bit more. the Dust bowl was a major hit to the agricultural side of the economy, in accordance with the other aspect of the economy, wall street. it was a double hit with banks loosing their money and massive relocation of the agricultural sector to find work elsewhere. with very little money in circulation merchants suffered from deflation, which is the price of their merchandise falling so they cant make ends meet either. so unemployment way up, without banks ability to loan, and no $ in circulation. the war saved us because it allowed the gov’t to contract work out to factories. but after the war it got bad again because mostly all the factories where suited for making military stuff which wasn’t needed any more, then we have Roosevelt and the “new deal” in order to get people jobs.
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