1. Causes of the Stock Market Crash
Buying Stock on margin was a leading factor to the stock market crash. What the thing was stock was said to be a good way to invest in and was safe. People would buy on margin meaning they would pay 10% on stock and a loaner would pay the rest, but if the stock did bad the person lost the 10% they paid for plus they had to pay the 90% back to the loaner. So everyone was trying to sell there stock but no one would buy them thus the stock market crashed.
Buying on Credit was another factor. People bought things on credit and they soon became satisfied with what they had. The companies kept making products at same rate so they became really inexpensive which didn't help.
People were in the stock for a short time which made stock go down. Stock was over valued and companies were losing money. Products were being over produced. Since the stock was inflated it had no value. Banks made it easy to borrow and they lost money.
Causes of the stock market crash
2. Causes of the Great Depression
People thought the great depression started with the Black Tuesday Stock Market Crash but it didn't the great depression started in early 1929. The great depression wasn't over until about 1941 so it lasted about 12 years with unemployement hitting a high of 25%. Some main Causes of the great depression are buying on margin, buying on credit, Supply and demand, The Stock market crash,Drought.
Buying on Margin: The stock market was going up so people could become rich by buying stock and buying on margin but when prices declined everyone become poor.
Buying on credit: People in the 20's bought on credit, but when the stock market crashed people started getting debts and couldn't pay back what they owed.
Supply and demand: Farms and factories were producing goods at the same rate even if prices rose but people couldn't afford it so the farms and factories had to cut back production because they didn't make any money and they had to lay off people and this trend continued until 25% of the population was unemployed.
Stock Market Crash: People had stocks but they had heard that things were going to fail so they started to sell all of their stock. Since there were no people to buy the stock the stock market hit the black Tuesday market crash.
Drought: The area from Texas to North Dakota received a major drought in the 30's because the land was over plowed, over grazed, lack of rain, and wind erosion. This lead to the Dust Bowl. Many of the farmers were hit by this and the moved west but weren't welcome so they received little money
People went to banks to get loans and the bank would give them the loan from other peoples accounts but they didn't pay back the money. So then people who got money taken from didn't hve money anymore then banks went bankrupt. 11,000 of the 25,000 banks failed in that time.
3. Hoover's Philosophy/ Cautious Steps.
Herbert Hoover's philosophy was that people would have less self-respect if the government helped the poor. He and all the other americans believed in rugged individualism in which the federal government would not get into businesses ways. Hoover opposed any kind of federal welfare and believed that americans should help each other.
Hoover's cautious steps were to have banks, businesses, and laborers that were key leaders to work together. He wanted them instead of cutting people to keep people and don't cut their wages. He wanted to find solutions to the economic downfall to not make bad situations into worse situations. He also asked that leaders didn't ask for higher wages or go on strike. Even though he had a good philosophy it didn't work businesses still closed and people still lost jobs. People at soup kitchens became a regular site and shantytowns arose in every city, and hoboes continued to roam.
4. Personal Thoughts.
The twenties were a great time to live followed by a time of great low. I believe that people got to much debt and couldn't pay it back. This was a big factor. Banks loaning out other peoples money didn't help when that money was never repaid and now people don't have their money that they earned. Buying stock was good but not the safiest so when a lot of big businesses did it hurt when the stocks were bad. I'm certainly glad I didn't live during this time period.
Herbert Hoover was set in a very awkward spot as president during the Depression. I believe he tried his best to let businesses fix themselves, and I believe he was a good president but he just didn't do enough. I think he should have stepped into some businesses and other big companies and get them back on track to help get out of the bad stock and the Great Depression.
Comments
Great job Jordan!