The Great Depression and Stock Market Crash of 1929

Posted: June 8, 2014 in Uncategorized

Guys,this is basically a brief outline of the Great Depression and The Stock Market Crash of 1929 #LoveforEconomics……The Great Depression was a period of extreme economic and political regression across many parts of the world.The Depression was preceeded by ‘The Stock Market Crash of 1929’,which as the name suggests was a large scale collapse of the US stock markets.The ‘roaring 20s’ were a time of post-war optimism and economic surplus in the United States. The free-flowing money resulted in a large scale migration of people from the countryside to the more urban and thriving areas.This slowly created financial neglect and dispair among the American farmers thereby resulted in slowed production of food.The other primary sector occupations like mining ,lumbering etc also had shortages in manpower.Over the course of this decade,the industrial and agricultural sectors had a decreased levels of productivity due to the migration of people.Also excessive indebtness of banks and other financial entities led to the severe unequal distribution of wealth.The investors with large amounts of money now invested in the market ‘en masse’ as they expected the market to progress further thereby multiplying their returns.The obscene amounts of money invested created an economic bubble in the 1920’s.Due to increased indebtness,investment and decreased productivity,there came a time when this economic bubble finally burst.It was marked by the stock market crash on 29th october,1929.One can conclude that the Stock market crash of 1929 and the Great Depression that followed brought the ‘roaring 20s’ to a halt.

Some economists believe that the stock market crash was one of the causes of the Great depression.It was a time when there was a huge decrease in the employment levels globally,prices of commodities and everyday goods drastically fell and there was a marked decrease in in the income levels also.The decline in the United States economy was a factor that initially brought down the global economy.However soon the flaws of the respective countries became the main causes their sinking economies.The early 30’s a dreadful time for the world as a whole.Despite continued efforts from various organisations and people, the early 30’s witnessed only a downward spiral of the world economies.By late 30’s most of the countries had removed the gold standard.The gold standard was a mechanism wherein people could trade in gold for currency notes.Most of the major countries removed this mechanism thereby devaluing gold so as to speed up economic recovery.The 40’s in the United States marked a period of economic recovery as the country doubled its military expenditure and created more jobs for the general public.It is believed that the moblisation of manpower for war decreased the unemployment rates to less than 10%.
The World War II superceeded the Great depression and the resulting financial insecurity.From here on the world economies advanced to new heights. I can only hope and pray that the world does not have to bear the brunt on the inevitable economic uncertainty in the near future.

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