Stock Market Crash And The Great Depression

The Stock Market Crash and The Great Depression
The Impact blacks and whites faced in America and how the economy was during this time. “During the Great Depression the real output and prices fell precipitously” “As consumer spending dropped and unsold goods began to pile up, slowing production.” When production slowed down they were losing money and running out of room to hold more which meant they would have to quit making. People couldn’t pay for anything which made people lose jobs,houses and etc . . . some or most people couldn’t afford food or enough food for their family. “The downturn in spending and investment led factories and other businesses to slow down production and construction and begin firing their workers.” “Industrial
Banks, which typically hold only a fraction of deposits as cash reserves, must liquidate loans in order to raise the required cash. This process of hasty liquidation can cause even a previously solvent bank to fail. The United States experienced widespread banking panics in the fall of 1930, and the fall of 1832. The final wave of panics continued through the winter of 1933 and culminated with the national “Bank Holiday” declared by president Franklin D. Roosevelt on March 6, 1933.” “Scholars believe that such declines in the money supply caused by Federal Reserve decisions had a severely contractionary effect on output. A simple picture provides perhaps the clearest evidence of the key role monetary collapse played in the great depression in the United States. Perhaps most important, because of actual price declines and the rapid decline in the money supply,consumers and business people came to expect deflation; that is, they expected wages and prices to be lower in the future. As a result, even though nominal interest rates were very low, people did not want to borrow because they feared that future wages and profits would be inadequate to cover their loan payments. This hesitancy,in turn, led to severe reductions in both consumer spending and business investment spending. The panics surely exacerbated the decline in spending by generating pessimism and loss of confidence. Furthermore, the failure of so many banks disrupted lending, thereby reducing the funds available to finance investment”(Banking panics and Monetary contractions) The most devastating impact of the Great Depression was human suffering. In a short period of time, world output and standards of living dropped precipitously. As much as one-fourth of the labour force in industrialized countries was unable to find work in the early