Speculation And The Resulting Stock Market Crashes example essay topic

Growing up in a blue collared neighborhood in the 1930's was very unusual for Mae Arlene Adams of Reading, Pennsylvania. Mae was the daughter of Floyd and Margaret Adams who also were born in Pennsylvania. During the 1930's, Mae was attending a small elementary school on the outskirts of downtown Reading, Pennsylvania. Her father was working part-time at a local steel mill as a foreman, and her mother was working full-time at a cigar factory. As the Great Depression began in 1931, many changes became evident in Maes neighborhood. As she headed out to play with her friends after school, she began to notice a solemn mood throughout the town.

Many kids would come out on their porch with a little slice of bread spread with lard and sugar for super. She also noticed her parents giving away food and coal to the neighbors to help them heat and cook. Her parents were economically sound even during the onset of the depression that they were able to give up some of there belongings. Unfortunately, not everyone dealt as easily with this time period as the Adams did. The Great Depression was the worst economic decline ever in United States history. It began in late 1929 and lasted about a decade.

Throughout the 1920's, many factors played a role in bringing about the depression; the main causes were the unequal distribution of wealth and extensive stock market speculation. Money was distributed unequally between the rich and the middle-class, between industry and agriculture within the United States, and between the United States and Europe. This imbalance of wealth created an unstable economy. Before the Great Depression, the "roaring twenties" was an era during which the United States prospered tremendously.

The nation's total income rose from $74.3 billion in 1923 to $89 billion in 1929. However, the rewards of the "Coolidge Prosperity" of the 1920's were not shared evenly among all Americans. In 1929, the to 0.1% of Americans had a combined income equal to the bottom 42%. That same top 0.1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all. In the 1920's, the United States was trying "to be the world's banker, food producer, and manufacturer, but to buy as little as possible from the world in return. This attempt to have a constantly favorable trade balance could not succeed for long.

The United States maintained high trade barriers to protect American business. If the United States would not buy from its European counterparts, there was no way for the Europeans to buy from the Americans, or even to pay interest on United States loans. This weakness in the international economy contributed to the Great Depression. Speculators began to flock the stock market. On Monday October 21, 1931 prices started to fall quickly. Investors became fearful.

Knowing that prices were falling, but not by how much, they started selling quickly. This caused the collapse to happen faster. Prices stabilized a little on Tuesday and Wednesday, but then on Black Thursday, October 24, everything fell apart again. By this time most major investors had lost confidence in the market. Once enough investors had decided the boom was over, it was over. Partial recovery was achieved on Friday and Saturday when a group of leading bankers stepped in to try to stop the crash.

Then on Monday, the 28 prices started dropping again. By the end of the day, the market had fallen 13%. The next day, Black Tuesday, an unprecedented 16.4 million shares changed hands. Stocks fell so much that at many times during the day no buyers were available at any price. This speculation and the resulting stock market crashes acted as a trigger to the already unstable United States economy. At this time the rich stopped spending on luxury items, and slowed investments.

The middle-class and poor stopped buying things with installment credit for fear of losing their jobs, and not being able to pay the interest. Consequently, industrial production fell by more than 9% between the market crashes in October and December. As a result, jobs were lost, and soon people starting defaulting on their interest payment. Radios and cars bought with installment credit had to be returned. All of the sudden warehouses were piling up with inventory. The prosperous industries that had been connected with the automobile and radio industries started falling apart.

Without a car, people did not need fuel or tires. Without a radio, people had less need for electricity. On the international scene, the rich had practically stopped lending money to foreign countries. To protect the nation's businesses the United States imposed higher trade barriers. Foreigners stopped buying American products. More jobs were lost.

More stores closed. More banks went under. More factories closed. Unemployment grew to five million in 1930, up to thirteen million in 1932.

The Great Depression had begun. At this time, it became quite evident to the Adams that they had to watch out for their own prosperity. Families didnt receive unemployment, social security, or federal aid during this time period. As the uprising in Europe became prevalent, the steel mills and railroads got increasingly busy. The railroads started hiring women, which was quite unusual during this time. Floyd Adams began a new job at a factory working 7 days a week making firearms just in case of a war.

Soon there after many men began to be drafted into the military as war got closer. As the war began, conditions worsened. Stamps began to be issued to ration food and fuel. Mae began to work in a local theater selling defense stamps and savings bonds to benefit the troops in Europe. Their residents of her neighborhood were still struggling to purchase everyday need items.

Mae continued to go to school not quite understanding the situation at hand. As evening fell across her town, her parents made sure to draw the blinds completely being careful not to let any light get out of the windows. Street wardens made rounds nightly to monitor the houses to avoid drawing attention to their town. They were often worried of European attacks because they were fairly close to the east coast.