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The Causes Of The Great Depression

1057 words - 5 pages

"What goes up must also come down"-Newton's Law of GravityAlthough they appear to be unrelated, the Stock Market Crash of 1929 and these words are closely connected. Following the laws of universal acceleration, gravity causes an object to achieve higher speeds when dropped from larger distances. With these high speeds, a greater force is achieved. The market crash resembles this due to the fact that a high economic level was reached compared to the expected level for that time, and when it fell, it fell faster and farther than any other recession. The question is, however, what let go to let this "gravity" take its toll? In more literal terms, What caused the Great Depression? Although many ...view middle of the document...

Evidence of this is shown in Paul Blanshard's article "How to live on Forty-six Cents a Day," in which a wife of a man who was "runnin' four jobs... and he ain't getting' any more than he use to get for one ($12.85)"(Doc 7). Whether it was having just "bread and butter and syrup" (Doc 7) for breakfast, or needing to "make (all of) the children's clothes"(Doc 7), poverty stricken Americans lived the stereotypical Hard Knock Life. How then, could this poverty ridden nation be present during the famous economic time commonly called the "Roaring-Twenties"?One does not need to be an Alan Greenspan to figure out the basic concept, that people do not generally buy things when they do not have the money. Prior to the 1920's a person had to save money up in order to pay for them, making the business run in an almost an even, up and down cycle, commonly referred to as the business cycle (Background Essay). Then a new idea came about, how about if we pay for an item in separate payments spread out over a large span of time? This idea was called installment buying, and it swept the nation. Debt was "no longer regarded as shameful, so people bough on installment"(Doc 5) Now, people thought, there would be no downward slope in the economy! Everything was affordable that once wasn't, and people felt a lot more wealthy than they really were. Now, people thought, there would be no downward slope in the cycle of business! They couldn't have been more wrong, because "consumers bought goods on installment faster than their income was expanding" (Doc 6). If there is one thing you shouldn't mess with, it's the business cycle, it has a tendency of getting even. Now that people were buying more things, the companies stocks were rising, which led to another concept of free money, a speculative boom in the stock market. The stock market became a reflection of how many people are buying the stocks, not a reflection of the...

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