Реферат: The Depression Essay Research Paper Depression of

high profits for a few industries, concealed basic problems. Thus the U. S. stock market

crash that occurred in October 1929, with huge losses, was not the fundamental cause of

the Great Depression, although the crash sparked, and certainly marked the beginning of,

the most traumatic economic period of modern times.

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 impending correction, but they were largely ignored by the

leading pundits. Many banks, eager to increase their profits, began

speculating dangerously with their investments as well. Finally, in October 1929, the

buying craze began to dwindle, and was followed by an even wilder selling craze.

On Thursday, October 24, 1929, the bottom began to fall out. Prices dropped

precipitously as more and more investors tried to sell their holdings. By the end of the day,

the New York Stock Exchange had lost four billion dollars, and it took exchange clerks

until five o’clock am the next day to clear all the transactions. By the following Monday,

the realization of what had happened began to sink in, and a full-blown panic ensued.

Thousands of investors–many of them ordinary working people, not serious players–were

financially ruined. By the end of the year, stock values had dropped by fifteen billion

dollars.

Many of the banks which had speculated heavily with their deposits were wiped

out by the falling prices, and these bank failures sparked a run on the banking system.

Each failed bank factory business and investor contributed to the downward spiral that

would drag the world into the Great Depression.

By 1930, the slump was apparent, but few people expected it to continue; previous

financial panics and depressions had reversed in a year or two. The usual forces of

economic expansion had vanished, however. Technology had eliminated more industrial

jobs than it had created; the supply of goods continued to exceed demand; the world

market system was basically unsound. The high tariffs of the Smoot-Hawley Act (1930)