One of the causes were Uneven Prosperity, 0.1% of families made 100,000$ a year, and 80% had zero savings. 200 companies controlled 49% of all U.S industry
which caused uneven prosperity. Although the economy was booming in the 1920's most purchasing was done by credit. U.S wealth was not spread evenly and the economy was unstable. The U.S. economy was booming in the 1920's and Uneven prosperity made recovery difficult.
People were buying thousands of shares of stock for as little as 10% down. Then people lost ten times as much as they put in.For the economy to function properly,
total demand must equal total supply. In the 1920's there was an oversupply of goods. 60 percent of cars and 80 percent of radios were bought on credit. The U.S.
economy was also reliant upon luxury spending and investment from the rich to stay afloat during the 1920's. The significant problem with this reliance was that luxury
spending and investment were based on the wealth's confidence in the U.S. economy. imbalance of wealth lead to large market crashes.
Black Tuesday, 1929. People saw stocks were actually falling. People hurried to get out of stocks and minimize their losses. As this happened, more people did the
same which exacerbated the situations. On Black Tuesday, a record16.4 million shareds were sold. This led to bank failures. Many people lost as much as ten times
their initial investment in the crash of Black Tuesday
Speculation in the 1920s caused many people to by stocks with loaned money and they used these stocks as collateral for buying more stocks. The stock market
boom was very unsteady, because it was mostly borrowed money and false optimism. When investors lost confidence, the stock market collapsed, taking them along
with it.People loss confidence and since they were developing mistrust of the economic situation, many wanted there money out of banks and buried in their yards.
The same thing that happened to the stock market. Banks ran out of cash and went bust. Few economic barriers existed to prevent total collapse. The banks that
did survive had to foreclose on a number of loans, collecting cars, land, and houses that nobody had the money to buy from the banks. As a result, these banks ended
up with tons of property but no way to get cash from it. This cash shortage closed even more banks. With the economy falling in shambles and companies defaulting on loans, nearly all private and corporate investment ceased. Companies couldn't afford to
expandin fact, many had to consolidate in order to cover the margins on their loans. In doing so they stopped hiring more people and began laying people off.
unemployment sky-rocketed. With people willing to work for less moneythan companies were currently paying, wages lessened too. Farmers and workers did not
All these changes affects the society in different ways .The Great Depression caused many people to close businesses and led the government to regulate the businesses and economic affairs. Depression hurt a lot of people, especially working people who lose there jobs. Bank failures clean out some depositors savings if
funds are not ensured. When there was the depression, most people can not meet the house or apartment payments so they lose there homes and become homeless.
During a depression some people must live on charity just to support themselves and there families. Sometimes the people who get the charity money, clothes, and
food get kind of embarrassed that they need...