The Great Depression
The Stock Market Crash of 1929, also known as the Wall Street Crush was one of the most impacting Stock Market Crash that the United States ever experienced in history as a country. The crash began as a ten years of economic struggle in the United States which was known as the Great Depression. The Great Depression scared the government, its people, many of the businesses and the entire country as a whole as the nation went from being in a positive state into a negative slump. The market crash began on Thursday 24th and Tuesday 29th of October of the 1929. The two dates were dubbed with the title “Black Thursday” and “Black Tuesday”. On the 3rd of September 1929, Dow Jones industrial Average had reached a significantly high record of 381.2 and at the closure of the market day on the 24th of October; the market had reached 299.5 which amounted to a 21 percent fall.
The 1920s being a period of great benefits and economic satisfaction; loads of rewards aided to the people. Technology and innovations lead to great productivity and benefits which facilitated the introduction of new and cheap products for the consumers such as refrigerators, radios, automobiles, washing machines, and others were all basic goods, and all indicated how well the economy was doing during the time. The best ways to purchase goods was probably buying on credit as it helped individuals to buy these products for their households without spending a lot of cash at a particular moment. It gave families less pressure when it came to purchasing and gave them time to benefit as they made payments more comfortable (Richardson, Gary & et al, 2016).
The Great Depression extended the periods of low stock prices, while proving that at the time, goods prices were becoming too high, the interest rates were at as tremendous level as it had never been experienced before. The decade had begun with the depression, a time when unemployment rate was increasing, as the number of unemployed persons hit almost 5 million. President Harding had to assign Herbert Hoover, who was the Secretary of Commerce a task of directing his efforts and energies to minimize the effects caused by the depression. The members of the President’s Conference of Unemployment represented a partnership between the businesses and the government and this aimed mainly at maintaining public work programs, wages, and relief agencies together with local actions.
Farmers felt most of the pain as they made up about 30 percent of the labor force. Through the 1930s, the huge collapse in the banking industry was witnessed as more than 9000 banks failed. This resulted to too many people losing their savings due to the failures. The problems of the bank survival and uncertain economic situations made people less willing when it came to applying for new loans.
During the 1920s, large population in the United States enjoyed prosperity. The affluence began to evaporate during the year 1929 and by the year 1932, more than 12 million people were unemployed. The American economy went from unprecedented growth it was during the 1920s to unprecedented misery during the 1930s. This was caused by restrictive trade policies, overproduction, problems in the banking industry, stock market speculations based on buying stock on credit, and the taxation policy. By the 1930s, the amount of money in circulation drastically decreased (Saint-Etienne & Christian, 2013).
The Labor and Employment
The rate of unemployment between 1920 and 1934 had drastically increased from 5.2 percent to 21.7 percent in the years 1920 and 1934 respectively, although the highest unemployment rate was witnessed in the year 1932 where it reached 23.6 percent.
The number of persons employed in the year 1929 was 47.6 million. In the year 1932, the number had reduced to 38.9 people employed.
By the year 1935, the per capita personal family income was 464 dollars.
Economy and the Government
The increase in the government spending from the year 1930 through the year 1940 was 5 billion dollars.
The Public Debt
The trend from the year 1920-1925 as well as from 1925-1930 was that, the debt decreased. From the year 1930-1935, however the debt increased by a huge margin.
These changes were caused by various factors. These factors could have been funding and assistance from the government as well as the new deal policies which were implemented during the fight against depression and could have dipped the debt due to new project funding.
How the Stock Market Crash affected the United States Socially, Economically and Politically
The Great Depression lead to a rapid d rise in the crime rates as many of the people who were unemployed resorted to criminal activities in order to put food on the table. Suicide rates increased, cases of malnutrition were reported, and prostitution was on the rise as desperate women sought for alternative ways of paying their bills. Generally, healthcare was not a priority to most of the Americans as doctor visit was only reserved for the direst of circumstances. The rate of alcoholism went up as many Americans sought escape outlets, compounded by prohibition repeal in 1933. Smoking cigar became too expensive and most of the Americans had to shift to cheap cigarettes.
Economically, the devastating effect of the Stock Market Crash was human n suffering. In a short period of time, the nation output and the living standards dropped precipitously. For more than a decade, the American free market economy failed to operate in a level which could allow many of the Americans to attain success economically. The ones who were lucky enough not to undergo the ordeal of the Great Depression may face difficulty time when imagining the unprecedented depths of social disarray that swayed America during 1930s.
Politics were affected by the depression and this badly shaking the confidence in unfettered capitalism, something which Herbert Hoover had to advocate for but it failed badly. As a result, American citizens voted for Franklin Roosevelt, who promised that the government spending would put the Great Depression in to an end. This new deal worked, and during the year 1934, the economy grew to 10.8 percent and the unemployment rate began to decline.
But FDR was concerned on adding to the $5 trillion debt. He had to cut back the government spending and during the year 1938, the depression resumed. Since people do not want to make the same mistake, politicians have become too reliant on tax cuts, deficit spending and other forms of expansionary fiscal policies. That led to a dangerous high United States debt (Hansen & Per, 2015).
Hansen, Per H. “Hall of mirrors: the great depression, the great recession, and the uses—and Misuses—of History.” Business History Review 89.3 (2015): 557-569.
Richardson, Gary, et al. “Stock Market Crash of 1929-A Detailed Essay on an Important Event in the History of the Federal Reserve.” Federal Reserve History. Np, nd Web 2 (2016).
Saint-Etienne, Christian. The Great Depression, 1929-1938: Lessons for the 1980’s. Hoover Press, 2013.