The Causes of the Great Depression The Great Depression was an economic downfall that to this day is the worst economic downfall in U.S history. The depression started in the United States. People all over the world were affected by it, especially in Europe, Germany, Great Britain and other industrialized areas of the world. Mainly because America was a big creditor to those countries after World War I. The Great Depression lasted in America for at least ten years, but it took twenty-seven years to get the economy back above depression levels.
In Germany America’s economic failure contributed to the rise of Adolf Hiltler, so the Stock Market Crash had a domino effect on our country and others. In America there were 16 million unemployed, which was about one third of the available labor force (Livingston1). There was some companies that faired well through-out this gloom; Camel Cigarettes was the top selling tobacco product. The reasoning for that is people were stressed out and felt that cigarettes relived
Perhaps the worst economic downturn in the history of the United States occurred from 1930-1939. The Great Depression led to domestic and international crises effecting the poor and wealthy alike. Many financial experts today continue to debate the cause of The Depression, although most agree that several events led to the economic decline. The famous stock market crash on October 29, 1929 is just one of many causes economists believe led to The Great Depression. Known also as Black Tuesday, October 29th left stockholders shattered with recorded losses reaching $40 billion dollars (Kelly, n.d.).
Franklin D. Roosevelt and the Success of His New Deal The American economy started weakening by the middle of the1920s. However, over investment and speculating in stocks inflated their prices that contributed to the delusion of a robust economy. Since stocks were the hottest commodity to invest in, people borrowed money and used their stocks as collateral to the banks.The Great Depression was considered started on Black Thursday October 24th, 1929 when the New York Stock Exchange collapsed in the greatest market crash with the Dow closed at 316.38, and the plunge continued until the Dow reached its low of 41.22 in 1932. When the stocks values dropped, people were not able to pay for their debts while the banks just held worthless collaterals. Many banks declared bankruptcies because they could not get back their money from stock investors.
The income statement’s total revenues doubled in two years due to their unusual growth. The problem to behind income statement and balance sheets stems from their company owned and franchised factories; instead of selling the donuts, the company sold machinery to make their products. The goodwill and required franchise rights doubled each year until 2004 which raised questions and concerns as to whether Krispy Kreme improperly implemented accounting treatments. Compared to the industry, Krispy Kreme was apparently a very high performing company, but we questioned the performance data. First problem we encountered were the current and quick ratios were unusually high due to the amount of cash, receivables and short term investments that Krispy Kreme held.
The middle class was nearly non-existent. This occurs often in the world, but the Great Depression was the worst economic downfall in the history of the U.S. It spread and affected all of the industrialized world. The depression began with Black Tuesday, and lasted for nearly a decade. According to Paul Alexander Gusmorino, the main cause of the drastic downfall was the combination of unequal distribution of wealth and the extensive stock market speculation that took place in the later years of that decade.
Finally, a list of comprehensive solutions will be given to solve America’s high unemployment rate. History Of Unemployment In the United States unemployment is usually stimulated by the collapse of certain industries that halt economic growth. During the latter part of the 1800’s, Americans became familiar with the term unemployment and its effects. The Panic of 1893 marked America’s first economic decline which was marked by the collapse of railroad development and bank failures. (cite) According to David Whitten a Professor at Auburn University, the unemployment rate in 1893 exceeded ten percent.
The imbalance has caused the middle class people to work longer hours to get out of terrible debt. In 1980, the average US household debt per person was less than $20,000. In 2008, it increased to nearly $50,000. According to director Charles Ferguson's lucid, probing exploration of what caused the recent financial crisis that nearly crippled the world market; the increase impersonal debt was one of the many consequences of a series of events that began with the deregulation of the financial industry under President Reagan in the 1980s. Just around the time Gordon Gekko was spouting, the virtues of greed in Wall
Before we can explore causes, we first need to define what we mean by The Great Depression The Great Depression was a global economic crisis that may have been triggered by political decisions (war reparations post-World War I), protectionism (Congressional tariffs on European goods) or by speculation .Worldwide, there was increased unemployment, decreased government revenue, a drop in international trade. Its kickoff in the U.S. economy was “Black Thursday," October 24, 1929. That's when 12.9 million shares of stock were sold in one day. It was triple the usual amount. At the height of the Great Depression in 1933, more than a quarter of the US labor force was unemployed.
Growing Up in the Great Depression The book Growing Up in the Great Depression by Richard Wormser is about the stock market crash of 1929, the causes of the Great Depression, and the impacts that the causes had on the nation. The Great Depression was an economic depression that settled over the country in the 1930’s. The depression affected everyone; the rich and poor, men, women, children, black and white, foreign and native born, workers and farmers. During this time “millions of people lost their jobs, their businesses, their farms, their homes, their savings, and their self-respect” (Wormser, 84). During the Roaring 20’s industry was booming, with more and more goods being mass produced.