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John Kenneth Galbraith The Causes Of The Great Crash

542 words - 3 pages

JOHN KENNETH GALBRAITH--THE CAUSES OF THE GREAT CRASHIn this article the main economic factors that contributed to the collapse of the economy are examined.*1921-29 The US was prosperous. We had cars, roads, radios, flight, and modern construction had begun.*The income was unequally distributed*Worker output rose while prices and wages remained static thus, mainly businesses profited.*Secretary of treasury Andrew Mellon reduced income taxes to benefit the rich*Those who received the highest incomes had increased throughout this time of prosperity. Also, it owned a quarter of the US wealth. Hence. The US was extremely dependent on the spending of the rich.*The unions were ...view middle of the document...

*These corporate companies relied on the ultimate holding company. If anything happened to it every1 was screwed.*The stock market was booming and could buy on margin which means that one could extend his holdings by borrowing funds. Loans increased at the rate of 400,000,000 a month and the interest on them was about 7-12%.*Catch: the boom was self-liquidating. It could last only as new $$ flowed into the market. Once the supply of $ began to falter, the market would cease to rise, and many would cash in. It crashed in October of 1929 (Black Tuesday).*It could have been forseen because it had happened repetively with the South Sea Bubble, John Law's Speculations and the Florida land boom. There had been a similar frenzy but in the end, it collapsed. It was allowed to proceed w/o effective hindrance. Harding died in 1923 but he put Daniel R. Crissinger in charge. Despite the fact that he was as incompetent as Scott Fitzgerald would have been for the job. He was later put in charge of the Federal Reserve System where he had the power to take action, but didn't.*Hoover blamed the NY gov.(FDR) for not taking action, but he was the pres. and should have requested the power from FDR so he could solve the problems.*During Coolidge's presidency many men tried to warn him. For example, William Z. Ripley whom he listened to however, when he said that regulation was the responsibility of the states Coolidge took no action. Also, if it seemed the market was in trouble the president or Secreteary of Treasury would issue statements saying that the market was actually fine.

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