Economical Events that lead up to the Great Depression
In the 1920's, things were really rocking in the US and around the world. The rapid increase in industrialization was fueling growth in the economy, and technology improvements had the leading economists believing that the up rise would continue. During this boom period, wages increased along with consumer spending, and stock prices began to rise as well. Billions of dollars were invested in the stock market as people began speculating on the rising stock prices and buying on margin. The enormous amount of unsecured consumer debt created by this speculation left the stock market essentially off-balance. Many investors, caught up in the race to make a killing, invested their life savings, mortgaged their homes, and cashed in safer investments such as treasury bonds and bank accounts. As the prices continued to rise, some economic analysts began to warn of an impend
For example, instead of allowing a person to withdraw everything from their account, perhaps allow them only to withdraw small increments over a period of time rather then all at once. Many banks, eager to increase their profits, began speculating dangerously with their investments as well. The Great Depression was the worst economic slump ever in U. Many depositors withdrew their money savings; millions of people lost their entire live savings. ------------------------------------------------------------------------**Bibliography**. ing correction, but the leading pundits largely ignored them. One way that might have prevented the mass hysteria would have been, to put a limit at the bank, on withdraws. If there had been restriction placed in backing in investment in the stock market, and the manufacture of goods there might not have been such drastic consequences. Finally, in October 1929, the buying craze began to dwindle, and was followed by an even wilder selling craze. It would have been better for manufacturers not too over produce, just because there was a downturn in the economy, which created a surplus. This would stop speculation and only people who really could invest in to the stock market would do so. When people bought their stocks on margin, they only had to pay 10%. Perhaps a little caution would have been a good idea. If the changes had taken place gradually it might have not have caused the stock market to crash, run on the banks, and surplus of goods which cause tremendous unemployment.
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