Great Depression

Topics: Wall Street Crash of 1929, Unemployment, Great Depression Pages: 2 (523 words) Published: December 3, 2012
In the late 1929 the United States of America faced a severe economic depression also known as the great depression, it was one the worse economic depression that the United States ever faced and it lasted for almost 10 years. The great depression was caused by a series of factors and mainly the stock market crash in 1929. The effects of the depression were felt everywhere in the world and had devastating outcomes leaving millions of man and women without a steady job and resulting in a drop in profits, prices and a regression of international trade. Many economists that studied the great depression all agree that the stock market crash that happened on October 29, 1929 also known as black Tuesday was the main cause of the great depression. The causes of this crash were overvalued stocks, analysts say: that the stocks were priced high and the P/E ratios were high and the P/E ratios at the time of the crash was around 60 in 1929. Another reason why the stock market crashed is the margin of buying. Buyers were only asked to pay 10% of the total value of the stock and the rest could be arranged in installments. The stock market couldn’t stay stable when a lot of money was getting borrowed from it and that led to a crash. When the stock market crashed a drop in prices and profits in all kind of industrial sectors was felt all over the world, for example without any change in supply the coal production dropped by 40%, metal production dropped by 70% and the silver production by 60%. Other sectors show the same pattern of drops after the stock market crash, building for business, homeowners and railway dropped by 20% of their normal statistics. These drops in production left no choice to companies but to lay off their employees resulting in a raise of unemployment by 25% just in the United States. This unemployment rate made life tough on everyone and a chance on finding a job was almost impossible dropping the weekly hours of labor by...
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