Black Tuesday: Rollercoaster Of Events Of The 1920's

1468 Words6 Pages

Throughout the decade of the 1920’s, America went through a rollercoaster of events. By the end of this decade, the US had one of the best economies in the world, and all seemed well. However, on a day known as Black Tuesday, in which the stock markets crashed, the US plummeted into an era known today as the Great Depression. During this period, the US was in the worst economic recession it has known to date. Countless people have speculated about the origins of the Great Depression, but there are a few major reasons that stand out. The Great Depression era, characterized by extreme poverty, unemployment, and crime, all started because of the crash of the stock markets, the unequal balance of wealth within the country, and the advancement of …show more content…

Up until the crash, the stock market had been where the money was being made. Therefore, because they were a great source of income, countless people would borrow money to try to make a profit. “Few regulations were placed on banks and they lent money to those who speculated recklessly in stocks” ("The Great Depression"). Because so many people bought stocks on borrowed money, when the crash of the stock market came, they did not have the money to repay from whom they had borrowed. Many of these people were in it for the short run, and borrowing money was an easy way to get money to buy a stock. Because the stock market was in such a great state, too many people started to borrow money from banks. The banks lent money recklessly, so they were not fully reimbursed because of all the money lost in the stocks. Banks started to shut down, so if any money was invested into that bank, it was gone forever. Along with the amount of borrowed money, when stocks began to fall, a mass panic occurred throughout the country. When the stock market initially started to fall, many people tried to get rid of the stocks that they had. “As stock prices began to drop, …show more content…

This was evident through several different aspects of society. One aspect was that a large portion of the wealth was concentrated to the rich, and that severely strained the economy. “The richest one percent of Americans owned over a third of all American assets. Such wealth concentrated in the hands of a few limits economic growth” (“The Great Depression"). Because so much money was owned by the wealthy, the economy was not able to flourish. The wealthy did not like to spend their money, and would often keep it with them. Money was not able to cycle through the economy, slowing growth. An economy cannot grow when a large portion of the wealth resides in one group of people, and that is what happened. Not only did this slow the economy, but it also made the rest of the country poorer by not allowing money to circulate. In contrast with the wealthy, who were stingy with their money, the average citizens often bought products that were not necessary, and because money was often tight, these products were bought on credit. Buying products on credit soon became a norm throughout society, leading to massive amounts of debt. “Many merchants offered installment payment plans, enabling the average American to purchase goods, including cars, on credit. Thus, Americans could purchase the new appliances and conveniences

Open Document