The Causes And Solutions Of The Great Depression

Essay by PaperNerd ContributorCollege, Undergraduate May 2001

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March 4, 2000 The Causes and Solutions of the Great Depression The collapse of the stock market began on October 24, 1924. Approximately thirteen billion shares were sold. The collapse was devastating and long-term. On Tuesday, October 29th, more damage was done. It became known as Black Tuesday, and about sixteen million more shares were sold. Many businesses closed, and millions of people were left unemployed. Wages for the employed dropped drastically. The value of money fell as the demand of goods decreased.

In John Kenneth Galbraith's book, The Great Crash 1929, one of the most renowned attempts to explain the damage of the 1929 crash was made. He claims there are five important factors: 1) The consumer gods market was limited by an inadequate dispersal of cash flow. People's incomes were not high enough to purchase the goods being manufactured.

2) Corruption and fraud was rampant in big business and in the stock market.

Wall Street was depending on useless paper that had no money behind it.

3) The banking structure collapsed after making too loans that could not be called in, resulting in a loss of people's savings.

4) The United States was put in further debt when loans of large amounts of money to foreign nations could not be repaid. High trade barriers in the United States led to the damage of foreign markets because they were not able to send their exports to the United States.

5) In the years prior to the Stock Market Crash, information about the economy was not nearly as detailed and profound as it is today. Economists of the day were not able to predict economic trends in industry, investment, consumer spending, and other factors that would have allowed them to identify a potential crisis. This is known today as...