The Great Depression: What Ended It?
On October 29, 1929, a date named Black Tuesday marked the greatest stock market crash the United States had ever seen. It had devastating effects on the United States and virtually every other country in the world. The United States suffered through hard economic times until 1941, when the Depression officially ended. There is a lot of debate on what ended the Great Depression, some say FDR’s “New Deal” programs got the economy rolling again; others credit it to World War II. Without Franklin Delano Roosevelt’s “New Deal”, the United States would have never recovered as fast as it did. What caused the Great Depression? Many children ask this question to their grandparents when they hear them recall their experiences during that decade. The Great Depression resulted from all of the borrowing by the banks in the “Roaring Twenties”. “The 1920s ‘boom’ enriched only a fraction of the American people. Earnings for farmers and industrial workers stagnated or fell” (“The Great Depression…”). This was due to lower production costs to run companies. The effect of this was that middle class Americans had to cut down on the products they bought during the late 1920s. Economists during this time period truly believed the stock market could not go down. They believed America had not hit its peak financially and the market would continue to climb. Even though the government warned investors and banks on the dangers of buying on margin, it still became very popular. According to the article, “The Stock Market Crash of 1929,” B. Taylor defined margin buying by saying:
Margins were generally around 50% at the time--that is, a lay investor could give his broker only 50% of the value of the stocks he wanted to purchase and the broker would put up the rest of the money. The investor would then pay interest on the loan that the broker gave him--the 50% value of the stocks. If the stocks increased in value then the investor got to keep all of the profit. When he sold he would
Margins were generally around 50% at the time--that is, a lay investor could give his broker only 50% of the value of the stocks he wanted to purchase and the broker would put up the rest of the money. The investor would then pay interest on the loan that the broker gave him--the 50% value of the stocks. If the stocks increased in value then the investor got to keep all of the profit. When he sold he would
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