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The Great Stock Market Crash in 1
It might be accurate to say that the New York stock market crash in 1 is one of the most memorable affairs in American economic history. During the period from after the First World War to the stock market crash in 1, about one decade, the US had experienced an unprecedented economic boom because it came out of the war with less damage than European countries (Harris, 188). What is more, mass production and innovation helped make many things such as cars and electrical appliances generally available and affordable. The higher the economy soared, the more the price of stocks went up. Therefore, it was widely believed at that time that people could get money by simply investing in stocks. As proof, a person who had General Motors stock worth $10,000 in 10 could have received no less than $ 1,500,000 by 1 (Blumenthal, 00). The selling and buying of stocks was nearly unrestrained in the United States. Although several people anticipated that a crash was just around the corner, a good many of the Americans never thought that the American economy could plunged into a profound recession. At last, the bubble economy collapsed on October in 1. At the Wall Street exchange alone, 16,8,700 sales were recorded on October , 1; the number of sales stood for a loss of about $10 billion in stock value, which was double the sum of money in circulation in the US in those days (Thomas & Morgan-Witts, 17). Thus, the Wall Street stock market crash of 1 was a devastating loss, and was a symptom of a deep-rooted recession that required immediate and effective solutions.
The New York stock market crash in 1 created many serious consequences. The Great Depression, which affected on not only America but also almost the majority of countries in the world, had begun. It was a more obstinate and harsher adversity than even World War II for a number of Americans in those days (Harris, 188). J.K. Galbraith (154), a historian of the NY stock market crash and also the author of The Great Crash stated that the number of stockholders was approximately 1.5 million, a very small percentage of the population. Therefore, most of the laborers, agriculturists, and tradesmen did not consider the breakdown of Wall Street as a serious problem for them (as cited in Harris, 188). However, in the aftermath of the crash, American people started to be worried about their bank accounts. During the 10s, since business had been consistently improving, banks had easily accommodated many enterprises demanding a great deal of money to expand their businesses. Not only that, many people who needed money to buy shares could get a bank loan far easier than before, even though they had not had collateral to secure the loan. For this reason, after the price of stocks slumped, most of the borrowers could not pay back their debts. This forced the banks to face hardship. Indeed, 46 American banks closed their doors in 1. Furthermore, because of the weak structure of the banks, one bankruptcy caused other bankruptcies (Galbraith, 154). In 1, over 5,000 banks failed (Aaseng, 001). Because of bank failures, a great many ordinary Americans gradually had to encounter sufferings, the worst of which was mass unemployment.
This was the beginning of an economic gdomino effecth. Since the unemployed could not afford to pay for what they had already bought on credit, and also to purchase what they needed in their daily lives, many goods and services were in much less demand than before. As a result, industries needed to be conservative about production, and wanted fewer laborers, so many workers were fired. By 1, the number of unemployed reached 1,000,000 (The Wall Street, n.d.).
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The United States was not the only country affected. The aftermath of the crash had serious consequences for Europe for two main reasons. First of all, many European countries had borrowed a great amount of money from the US in order to restore their economies, ravaged by World War I. When the US started to call in the debts, these countries plunged into a relentless recession. For example, Germany was the country the most affected by the Great Depression, having borrowed over billion dollars from 14 to 18 (Aaseng, 001). Moreover, by 1 practically two out of five healthy Germans were unemployed. Another reason for the spread of the Great Depression was that the US government imposed a severe tariff on import goods to protect the domestic market. For instance, Britain was severely affected, especially in certain areas such as coal, steel, and shipbuilding (The Wall Street, n.d.). Jarrow, known as the center of these industries, unemployment rose by 80% (The Wall Street, n.d.). Clearly, the Wall Street crash had had a very significant impact on the American economy, leading to the Great Depression, which was a time of great suffering not only in America but also throughout most of the world.
Before 1, a majority of people believed that, gcthe government that governed least, governed besth(Aaseng, 001, p. 4) However, the devastating circumstances of the Great Depression made them ask for government assistance after 1 (Aaseng, 001). Franklin D. Roosevelt, elected as the US president in 1, was a person who actively carried out government intervention in the American economy (Encyclopedia of Marxism, n.d.). The New Deal policy, which Roosevelt applied in order to restore civilian confidence and rehabilitate American economy, was passed. This policy gave the Roosevelt administration power to establish an array of government agencies. The Works Progress Administration and the Civilian Conservation Corps were programs in which the federal government allocated immediate and temporary assistance, and also provided work for the unemployed (Encyclopedia of Marxism, n.d.). The Tennessee Valley Authority was a program in which the government provided a immense public works project building dams in order to distribute inexpensive electric power and keep floods from happening (Encyclopedia of Marxism, n.d.). Thus, the New Deal was designed to focus on reducing unemployment, the chief cause of the Great Depression. As a result, unemployment gradually fell from 1,000,000 to 8,000,000 between 1 and 140 (The Wall Street, n.d.). Although it took a long time to reorganize the American economy, it could be said that the New Deal policy worked out.
In conclusion, it was obvious the Wall Street crash had a devastating effect on the American economy. The staggering bankruptcies of the nationfs banks had produced mass unemployment, which had reduced civilian purchasing power, causing many industries to manufacture less and lay off their laborers. As the number of the unemployed rose, the economy became worse and worse. The Great Depression must have been a difficult problem to solve. Although war is terrible for everyone involved, World War II proved to be a pivotal period in U.S. history. Munitions had to be produced and numerous workers hired. Today, even though stock prices rise and fall, government legislation provides stability to the U.S. economy. Hopefully, the Great Depression will never happen again.
References
Aaseng, N. (001). The crash of 1. San Diego Lucent Books.
Blumenthal, K. (00). Six days in October. New York Atheneum Books For Young Readers.
Galbraith, J. K. (145). The great crash 1 (nd ed.). Boston Houghton Mifflin Company.
Harris, N. (188). The great depression. London B.T. Batsford.
New deal. Encyclopedia online. Retrieved February 6, 00, from
http//www.marxists.org/glossary/events/n/e.htm
Thomas, G., & Morgan-Witts, M. (17). The day the bubble burst. New York Doubleday.
The Wall Street crash. (n.d.). Retrieved February 6, 00, from
http//www.bbc.co.uk/education/modern/crash/crashhtm.htm
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