Causes of the Great Crash essays

Causes of the Great Crash essays In 1929 there had been a bull market for some time, and it seemed like it would never stop. However, such prosperity would not last forever. In October of that year, the market came to an abrupt halt. It was not a simple matter however. There was no single reason why the market finally crashed as it did but rather there were many factors that had lead to this devastating event. The first reason that had helped contribute to the stock market crash of 1929 was the huge misdistribution of wealth. The rich 5% elite was controlling the economy as well as about 25% of the nations income. Low wages, horrible working conditions and tremendous hours remained the same, as labor unions were completely ineffective during this time period. Because wages and prices werent changing, as was the output per worker was, the rich were only getting richer. Since they were the big spenders, they basically decided which direction the economy was going. The second reason was the fact that the unstable United States economy was part of an unstable world economy. As America prospered in the 1920s, Europe struggled to rebuild itself from the devastation of the war. America throughout the 1920s, with its booming economy, helped Europe by lending them millions of dollars. The loans given out by the United States were expected to be paid back by the foreign allies. However, what was really misunderstood by the United States was that the foreign allies were in no shape to repay any loans that had been taken from the Untied States. In addition to that, there was a lot of corruption involved with many overseas loans such as in Latin America and Peru. In light of all this, investors of course realized the danger and in turn simply stopped giving loans out. This created a negative effect for farmers who now had a smaller export market and for bondholders. Another big reason was the mass marketing of stock ...