Stock Market Crash Of 1929 example essay topic

The Great Depression was a huge economic downfall in North America and involved many other industrialized countries of the world. The Depression began in 1929 and lasted for about ten years. Millions of people lost their jobs along with many businesses going bankrupt. The common misconception of the Great Depression is people think that the stock market crash was the main cause for it. There were many causes for the Depression; unequal distribution of money during the 1920's was the main cause of the Depression. This unequal distribution happened on many different classes of people.

The imbalance of money is what created such an unstable economy. The stock market was doing much worse than people thought during this period. This lead to the biggest stock market crash in our history. The mis distribution of wealth and the stock market crash caused the economy to plummet (Modern).

The stock market was bigger than ever in the 1920's. Prices reached levels that people never dreamed of. At one point when the market was roaring in September 1929 forty percent of stock market values were pure air. This meant that investors thought that the stock market would go up because it had been going up. By 1928 and 1929 the Federal Reserve was worried about the high level that the stock market had reached (Galbraith 116). The Federal Reserve feared that the stock market might burst suddenly.

If this did happen investment might fall, parts of the stock market might not be able to pay back debts, and even worse recession might result (Galbraith 118). The Federal Reserve in 1928 tried to make borrowing money for stock speculation more difficult and very costly by raising interest rates. All of the options that the Reserve tried had unfavorable risks associated with them. Many economists believed that the Federal Reserve was responsible for the recession. The stock market did crash on October 29 1929. The Federal Reserve tried to do to much to stop the recession and in return brought on the recession that they were trying to stop (America).

When the stock market crashed in October this day was known as "Black Tuesday". On this day Americans saw their stocks lose a tenth of their value. The exact reason for why the stock market busted on this day are unknown (Delong 1). The stock market crash of 1929 greatly added to the uncertainty in the economy. No one knew what was going to happen next with the economy. Firms cut back on purchases of produce goods and the consumers cut back on the purchases of consumer goods (Galbraith 117).

This uncertainty mixed with the stock market crash created the biggest recession America has ever seen. By 1933 millions of Americans were out of work. Bread lines were a common sight in most cities. Hundreds of thousands of people scoured the country in search of food, work, or a roof. There was a popular song from this era known as "Brother, can you spare a dime (Modern)?" A big step that happened for the unemployed were the Civilian Conservation Corps, a government program that brought relief to men between the ages of 18 and 25.

The Conservation Corps gave jobs to young men in work camps across the country for about $30 per month. There were about 2 million men that took advantage of these jobs (The Great Depression). These men took part in a variety a jobs that included: planting trees, elimination stream pollution, creating game and bird sanctuaries, and conserving natural gases. For the other part of society work relief came in the form of the Civil Works Administration. These jobs consisted of ditch digging to highway repairs to teaching. Civil Works Administration was created in November 1933 and was ceased in the spring of 1934.

Roosevelt continued to offer unemployment programs that offered pay (America). The average farm income in 1930 was the lowest it had been since 1921. Many farmers could not afford to pay their mortgages and lost their land. Five percent of the nation's farms underwent mortgage foreclosures in 1933 (The Great Depression). The situation was the worst in the area known as the "Dust Bowl". This was an area of about 150,000 square miles in the Midwest.

A result of the extreme farming before the 1920's this region suffered from enormous soil erosion and dust storms which made it impossible to continue farming there through the 1930's. Many of the farmers moved west to find new land and in most cases they became temporary workers or sharecroppers (Galbraith 120). Doing this helped the farm economy in a few ways by reducing production, but brought hardship to the people of the fertile Dust Bowl. The recession drastically reduced the number of goods and services bought and sold. The financial centers suffered from a huge number of business failures. Business failure came to a peak in 1932 when over 30,000 failures happened nationwide (Modern).

Banks closed their doors because of a lack of liquidity. There were almost 2,500 banks that suspended operations in 1931. Production decreases as a result of falling investment and an inability to pay workers (America). The presidential campaign of 1932 was mostly a debate over the causes and possible solutions of the Depression. Herbert Hoover was the unlucky man entering the presidency only eight months before the stock market crash. Hoover tried his hardest but was ineffective in getting the industry going again (America).

Herbert Hoover's Democratic opposition, Franklin D. Roosevelt said that the Great Depression came from the economy's flaws. This had started from the Republican doings during the 1920's. Mr. Roosevelt was prepared to use the government's power to solve the Depression problem. The presidential election resulted in a Roosevelt sweep who won the election by over 7 million votes (Delong 1). In 1933 the newly appointed President Franklin D. Roosevelt brought a sense of confidence and optimism that immediately gave hope to the people. Roosevelt had many new programs including his famous New Deal.

"The only thing we have to fear is fear itself", which was said in his inaugural address to the nation (The Great Depression). The New Deal was taken from the Europeans which introduced many social and economic reforms that had been going on over there for ore than 50 years. The New Deal in America was remarkable because of how fast it took to go into affect. Which took 50 years in Europe seemed to only take a few years in America. There was never any speculation or criticism over the New Deal; in fact many thought the New Deal gave individuals a boost of interest in the United States government (Modern). When Roosevelt first came into office the banking system of the United States was doing horrible.

Banking took such a steep downfall that many people believed that banking would never be the same again. During Mr. Roosevelt's presidency the banks were closed and then reopened almost within a year of him taking oath (Galbraith 58). The government started a plan of moderate currency inflation in order to provide relief to debtors. New governmental agencies brought generous credit buildings to industry and agriculture. The Federal Deposit Insurance Corporation insured all savings bank deposits up to $5,000. This meant that an individual was insured in case of a bank going bankrupt or in the case of a bank getting robbed.

Very severe punishments were being imposed on the sale of securities on the stock exchange (America). The National Recovery Administration was established in 1933 with the National Industrial Recovery Act. These both attempted to end cut-throat competition by setting codes of conduct for fair competition in order to generate more jobs and thus more buying power from the consumer. The Recovery Act was liked at the beginning, but businesses soon complained of how many regulations were put on them (The Great Depression).

This promptly led to the Act being called unconstitutional in 1935. By 1935 other polices aided in recovery which lead the government to take their side. The government realized that administering prices in certain businesses caused a downfall on the national economy and was not helping in recovery. During the New Deal era was when organized labor made greater gains than at any previous time in American history.

In 1935 Congress passed the National Labor Relations Act which outlawed unfair labor practices, gave workers the right to bargain through unions of their own choice and prohibited employers from interfering with union activities (America). The National Labor Relations Board supervised collective bargaining, administered elections and ensured workers the right to choose the organization that should represent them in dealing with employers. With the great progress that labor organization were making came a sense of common interests and labor's power went up not only in industry but also in politics. This political power was seen within the two major parties; however the Democratic Party usually received more union support than the Republicans (Galbraith 62). In the early years of the New Deal it gave a great series of legislative ideas and achieved sharp increases in production and prices. The New Deal did not bring an end to the Great Depression though.

New demands were being brought by businesses to end the Depression. Businessmen cried over the end of "laissez-faire" and kept complaining about regulations being put on them by the NIR A (The Great Depression). Angry people started to mount speech attacks that drew many people that were not satisfied at how slow the pace of recovery was going. The men responsible for these speeches included: Francis E. Townsend idea for old age generous pensions, Father Coughlin, a radio priest who blamed international bankers for the slow recovery. Perhaps the most famous speech "Every Man a King" plan of Huey P. Long which stated that every man should have the government ran the way they wanted (Modern). Reassured by the overwhelming Democratic victory in the midterm elections of 1934, Roosevelt laid out his plans for the Second New Deal in the 1935 State of The Union Address.

He outlined six ways in which the administration would renew the efforts begun under the first New Deal and respond to the criticism of the last year (America). In April of 1935, Congress passed the Emergency Relief Appropriation Act. This act granted $5 billion to Roosevelt with which he could do, in effect, whatever he pleased. The majority of that funding went into the creation of the Works Progress Administration (WPA), headed by Harry Hopkins.

FDR's fear of a permanent welfare class caused him to demand that the WPA provide jobs rather than simply hand-outs. Lasting for eight years, the WPA pumped $11 billion into the economy, supporting the unemployed of all backgrounds, from industrial engineers to artists (Delong 1). Along with the National Youth Association and the Public Works Administration, which focused on employment in construction projects, the WPA was a symbol of the Second New Deal's commitment to controlling unemployment. In 1935, unemployment was 20.3 percent. By 1937, it had fallen to 14.3 percent thanks in great part to Roosevelt's programs (Delong 1). Franklin D. Roosevelt knew he had to respond to the widespread criticism of the Agricultural Adjustment Administration policies that had increased the rural poor.

He responded by creating the Resettlement Administration in May of 1935. Headed by Rexford Tug well, the Resettlement Administration aimed at halting rural decay by relocating and rehabilitating the rural poor and dispossessed (America). In 1936, the Supreme Court ruled the Agriculture Adjustment Administration polices unconstitutional, deciding it enforced illegal taxation. President Roosevelt pushed the Soil Conservation and Domestic Allotment Act through Congress to replace the main functions of the Agriculture Adjustment Administration (Modern). Support for organized labor was a major characteristic of the Second New Deal.

Under the command of Secretary of Labor Frances Perkins, the Second New Deal saw the labor movement flourish, as leaders such as John L. Lewis of the United Mine Workers and Sidney Hillman of the Amalgamated Clothing Workers brought labor issues to the forefront of national consciousness (The Great Depression). The government supported the new power of unionization and collective bargaining with legislation such as the National Labor Relations Act of July 1935, which provided a framework for collective bargaining, and the Fair Labor Standards Act, which defined legal working conditions (Delong 1). One of the most lasting programs of the Second New Deal was the creation of Social Security benefits for the elderly by the Social Security Act of 1935. This act was passed largely in response to the elderly rights movement headed by Francis Townsend.

Social Security created a system of insurance for the elderly or the unemployed and disabled based on employer and employee contributions (The Great Depression). Strict regulation of business and finance may be seen mainly through the empowering of the Federal Reserve Board to exert tighter control over the money supply, and through the enforcement of the Securities Exchange Act of 1934, which required that a detailed and truthful prospectus be publicized for each company issuing stock on the United States stock market (Galbraith 75). The goal of heavier taxes on the wealthy was accomplished through the Revenue Act of 1935, which raised personal income taxes on the highest income levels (America). On December 8, 1941 the U.S. Senate issued a declaration of war on Japan. Germany declared war on the United States on December 11, 1941. Industrial factories were at first slow to convert into making military machinery.

By 1942, 33 percent of the economy was devoted to the war effort (Modern). This gave society a sense of patriotism and devotion to one's country. Between 1941 and 1945 the United States spent about $250 million a day in order to defeat their enemies. Federal spending was more than $320 billion over that period.

That was two times as much money as the federal government had spent in its entire history up until that point. This government spending stimulated an industrial boom and stopped unemployment. By the end of the war in 1945, the farmer's income had more than doubled. Corporate profits rose by 70 percent and the wages of the employees increased by over 50 percent. The most interesting statistic was that the earnings of the bottom fifth of workers rose to 68 percent.

The Great Depression soon came to an end being swept away by the war (America).