The Great Depression
The depression period started with a collapse of the New York Stock Exchange in October 1929. For the next three months, stock prices kept on falling in the United States and by 1932 the prices were just about twenty percent of their value in 1929. Besides ruining many thousands of individual investors, this precipitous decline in the value of assets greatly strained banks and other financial institutions, particularly those holding stocks in their portfolios. This way most of banks were eventually forced into insolvency, eleven thousand of twenty five thousand banks in the US had failed. The failure of all those banks together with loss of confidence in economy resulted in reduction in spending and production demand, thus aggravating the downward span. The output rates dropped and unemployment rate rose, by 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers, or 25-30 percent of the work force.The Great Depression initially started in the United States of America but rapidly moved to Europe, since the two had close economic relations. After the World War I America came out as a major creditor and financier of postwar Europe. Meanwhile, Europ
Buying stocks on margin functioned much the same way as buying a car on credit. The next day, Black Tuesday an unprecedented 16. All these measures resulted in the overall reduction of international trade: by 1932 the total value of world trade had fallen by more than half as country after country took measures against the importation of foreign goods. The volume was so great that the ticker fell behind. This discovery let United States to establish completely different economic structure. Stocks fell so much, that at many times during the day no buyers were available at any price. Speculators continued to flock to the market. Even these returns of over 100% were no measure of the possibility for investors of the time. In the same way, the huge market crashes of 1929 were based on fear. But the market drops knocked down the confidence. In 1929 alone, a record volume of 1,124,800,410 shares were traded on the New York Stock Exchange. He used the increased government control and promoted public works to help the economy to recover. The result was the start of the Great Depression.
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