Imagine waking up one morning, only to find out that all your investments and savings are completely gone. This era was called the Great Depression. A few other notable factors of the great depression are, structural weaknesses, overproduction, and the global economic and trade networking just kept the depression going. The resulting period ranked as the longest and worst period of high unemployment and low business activity in modern times. The Great Depression was the worst economic slump ever in U. Banks, stores, and factories were closed and left millions of Americans jobless, homeless, and penniless.
Many people came to depend on the government or charity to provide them with food. It led to a sharp decrease in world trade as each country tried to protect their own industries and products by raising tariffs on imported goods. The economy continued to fall almost every month.
At first the stock market was an important but not the dominant influence. Everything was going great; the stock prices reached what looked to be a permanently high plateau. In September of that year the market began to slide, but people ignored the signs. More than 16 million shares changed hands in frantic trading. Investors soon realized they were heavily in debt so they started to sell their stocks, which led to others doing the same. This was the main start of the depression, because it not only wiped out the savings of thousands of Americans, it hurt commercial banks that had invested in the corporate stocks.
Many of the middle class people lost their life savings and had no other way to cope with the crisis. History called it Black Thursday because it happened on October 24 which was Thursday. The birth of the crash gave the start to ten-year Depression.
Although many people say that the Great Depression started with the Wall Street Crash, some insist that the Depression happened not because of that bang. The economic conditions of the United States were less than satisfactory. The agricultural sector suffered greatly. Tractors were expensive, so farmers were into debt to finance their expansions.
One more point of view says that the Great Depression was caused by overproduction. Unsold goods piled up because people did not consume all that was produced. All these are different views, and you pick the one you like most. The facts and factors which are written above explain clearly why the Great Depression took place in the history. It happened. Nobody can change it.
Some experts call the period before the Depression s the period of prosperity. That was the age of jazz and the days of first Miss America elections, and first Oskar ceremony.
People got electric washing machines, electric refrigerators, and record players. In people started watch sound movies. Even though everything looked like a new age, people faced Depression. People used it not carefully during the time before the Depression. Essay about money analyzes this issue clearly.
This is a good question to ponder.
Once John D. Rockfeller said that depression makes people discouraged, but it is the matter that once appears and then goes away; prosperity always comes back. Despite his words, the Wall Street was swept by panic. Each bank closed its doors. Factories began to slow down productions. An abundance number of workers were fired. Those people who were employed got small wages.
Crowds of people were gathering at the Wall Street and outside the banks that failed. The unemployment rate was super high. People stood in soup lines outside soup-kitchens. Many fired workers were wandering about the country to find any job.
The Great Depression: Introduction
Some people moved from the cities to countryside. Thus, they were able to feed their families. The governors and the Board understood the need for coordination; frequently corresponded concerning important issues; and established procedures and programs, such as the Open Market Investment Committee, to institutionalize cooperation.
When these efforts yielded consensus, monetary policy could be swift and effective. But when the governors disagreed, districts could and sometimes did pursue independent and occasionally contradictory courses of action. The governors disagreed on many issues, because at the time and for decades thereafter, experts disagreed about the best course of action and even about the correct conceptual framework for determining optimal policy.
Information about the economy became available with long and variable lags. Experts within the Federal Reserve, in the business community, and among policymakers in Washington, DC, had different perceptions of events and advocated different solutions to problems. Researchers debated these issues for decades. Consensus emerged gradually. The views in this essay reflect conclusions expressed in the writings of three recent chairmen, Paul Volcke r, Alan Greenspan , and Ben Bernanke.
Unintentionally, some of their decisions hurt the economy.
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Other policies that would have helped were not adopted. The Fed did this in an attempt to limit speculation in securities markets. This action slowed economic activity in the United States. The Fed repeated this mistake when responding to the international financial crisis in the fall of This website explores these issues in greater depth in our entries on the stock market crash of and the financial crises of through This website explores this issue in essays on the banking panics of to , the banking acts of , and the banking holiday of One reason that Congress created the Federal Reserve, of course, was to act as a lender of last resort.
Why did the Federal Reserve fail in this fundamental task? Other governors subscribed to a doctrine known as real bills. This doctrine indicated that central banks should supply more funds to commercial banks during economic expansions, when individuals and firms demanded additional credit to finance production and commerce, and less during economic contractions, when demand for credit contracted. The real bills doctrine did not definitively describe what to do during banking panics, but many of its adherents considered panics to be symptoms of contractions, when central bank lending should contract.
Essays in this Time Period
This pruning of weak institutions would accelerate the evolution of a healthier economic system. Among leaders of the Federal Reserve, differences of opinion also existed about whether to help and how much assistance to extend to financial institutions that did not belong to the Federal Reserve. Some leaders thought aid should only be extended to commercial banks that were members of the Federal Reserve System. Others thought member banks should receive assistance substantial enough to enable them to help their customers, including financial institutions that did not belong to the Federal Reserve, but the advisability and legality of this pass-through assistance was the subject of debate.
Only a handful of leaders thought the Federal Reserve or federal government should directly aid commercial banks or other financial institutions that did not belong to the Federal Reserve. From the fall of through the winter of , the money supply fell by nearly 30 percent. The declining supply of funds reduced average prices by an equivalent amount. This deflation increased debt burdens; distorted economic decision-making; reduced consumption; increased unemployment; and forced banks, firms, and individuals into bankruptcy.