Black Tuesday and the Great Depression

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As the American economy is presently dealing with a heavy recession, I deemed it appropriate to choose the Great Depression and the Stock Market Crash of 1929 as the topic for my research paper. The Great Depression was a 10 year period of suffering in the United States from 1929 to 1939, also majorly affecting the rest of North America, Europe and other industrialized areas across the globe, caused by many different events and choices. In early 1929, as the New Era neared its calamitous end, America was the richest nation in the world; the richest in all history. America’s 122 million people had more real wealth and real income, both per person and in total, than the people of any other country (Chandler, 1970). General observations of the stock market frequently discussed were of the high stock prices, and speculations were made about what would happen in the late 1920s. Were the stocks generally too high? Or was this a new level for the stock market? October 29, 1929, otherwise known as Black Tuesday, gave a precise answer to these questions with the crash of the New York Stock Exchange (NYSE) and the start of the Great Depression in America, quickly to spread across the globe. The Great Depression is often said to demonstrate the instability of market economics and the need for government oversight and direction (Smiley, 2002). The stock prices were far too high, which quickly caused the bloated stock market to crash, resulting in dynamic losses for the entire American economy. Stocks had risen to uncommonly high levels which had not been explored before, but occurred regularly throughout the late 1920s. These high prices marked the peak for stocks in September of 1929 just before the market began to drop drastically. The Times estimated the loss for Black Tuesday at between $8 and $9 billion (Harold Bierman, 1998), with the overall loss at a much higher price than that. In reality, the major causes of the Stock Market Crash were because of actions taken and decisions made during the Roaring Twenties. However, the Great Depression did not occur simply because of one cause. It was a combination of easy credit, unequal distribution of wealth between the classes, the Stock Market Crash, and many more rising tribulations.

The Roaring Twenties were a time of liberal and progressive ideas which included new technologies and goods resulting in an increase of the monetary prosperity within the economy. There was Henry Ford’s development of the moving assembly line, and new industries and inventions in chemicals, aviation, and electronics. By 1929, the United States were producing over 40% of the world’s manufactured goods (Foner, 2008). The automobile was the backbone of the prosperous economic growth. Henry Ford’s inexpensive Model T, with its ability to be mass produced was very significant, seeing that throughout the 1920s, automobile production tripled from 1.5 to 4.8 million. Charles Lindbergh flew the first solo transatlantic flight in 1927, and the nation’s total income rose from $74.3 billion in 1923 to $89 billion in 1929, along with many other prosperous events (Gusmorino). Even though there were these numerous new expansions that increased the standard of living in the United States, there was a good portion of the economy that remained in poverty and was not able to prosper like the rest of the country. Farmers’ incomes continually declined, which forced many banks to foreclose tens of thousands of farms because owners were not able to pay the mortgage. Also, the majority of families had no savings because everything was bought on easy credit, which would drastically hurt them when the stock market collapsed in 1929. Many goods in the 1920s were commonly purchased on credit through a new type of payment plan, otherwise known as “buy now, pay later.” An interesting fact is that while Calvin Coolidge was in the White House, Herbert Hoover had been warning since 1925 against the use of credit in the market. Coolidge,...
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