To conclude, the Great Depression wasn’t just a fail in the stock market, it was a combination of social and economic factors. Isolationism, made us overproduce and under consume, which resulted in a loss of jobs and money. Consumerism led people to buying expensive things that they don’t need and regretting it later. The Great Depression not only affected business but also everyday Americans. In all of American history, the Great Depression was the worst economic collapse that severely affected
The economy plummeted and everyone felt the effects of it .The severe downfall of the American economy in the 1930’s known as the Great Depression was the result of speculation and installment buying, income maldistribution, and overproduction throughout America. After the roaring 20’s, speculation and installment buying drastically increased
This financial pandemonium trickled down the entire system as businesses weren’t selling anything and millions were laid off. Americans had lost all trust in the financial institutions that had developed the country thus far. For this reason, a wave of bank runs began to ensue. A bank run is when large amounts of people look to withdraw their money from banks. While it is their money, this creates solvency issues because a bank doesn’t actually hold that much money at a time.
This law increased custom duties by nearly 50% on imports of more than 20,000 types of goods. Many countries, as a retaliatory measure, also increased their import taxes. As a result, world trade fell sharply, which contributed to exacerbating the Great Depression. With overproduction still occurring, this international standstill only made to intensify the already critical situation. The tariff also increased living costs, limit exports and hurt investors as the high tariffs would make it harder for debtors to pay off loans, continuing to weaken banks.
Interest rates continued to rise in order to reduce inflation; this caused manufacturing and housing to weaken. The savings and loans industry suffered during this time. They experienced frequent account withdrawals, as depositors moved their money to higher-earning accounts offered by commercial banks. The savings and loans industry was already struggling, the recession only made it worse. High mortgage rates destroyed the value of mortgage-backed loans, which is the primary asset of the savings and loans association.
Prices began to drop causing panic across the country. Reassurances from banks that they would keep lending stopped the panic. By the spring of 1929, there were more signs that the economy might be headed towards a major crash. House construction went down, steel production decreased, and car sales lowered considerably. There were also some people with knowledge of the stock market who were warning others that a serious setback would be coming.
The early republic had frequent wars and changes in policies which eventually led to a collapse of central authority and economic contraction. In the republic of China, after the fall of the Qing dynasty, new industrial developments resulted in an increase in demand for Chinese goods. This demand led to an increase of profit for the industrial workers. Years later around 1931, the rural economy of China hit a Great Depression. The Great Depression was caused by an overproduction of agricultural goods which led to an increase on imports and falling prices in the Chinese market.
As evolution continues, people will continue to deal with fear in severe ways. They will have big reactions, which can cause large-scale events. One example of this is the stock market crash of 1929. When the stock market began to decline, people began to panic. If they didn’t pull their money out of the banks, they could lose their entire life savings.
(Collins, 2012) It appears there was immense praise from other networks and the media that analysts anticipated stock price growth. This falsehood and these unethical behaviors led to the downfall of Nortel. The company did not live up to the expectations investors projected. Roth put out false financial statements that did not contain proper financial standing of Nortel. (Collins, 2012) Management’s actions drove the stock prices down dramatically and investors lost large amounts of their investments.
After the first war Britain switched their money over to the “Gold Exchange”, which did not help them economically. While making this switch, they also overvalued the pound at 1-4.86 (U.S. dollar). The U.S. in turn reduces its interest (5). Jumping past the roaring 20s, the “depression” hits and the government sets up many different policies, which exacerbate the downfall. Tariffs and wage standards are inflicted and the unemployment rate continues to soar.