Causes of the Great Depression :: American History Economics Economy Essays

Causes of the Great DepressionThe Great Depression was the worst economic slump ever in U.S. history, and one which dissipate to virtually the entire industrialized world. The depression began in late 1929 and lasted for virtually a decade. Many factors played a role in bringing about the depression. The main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920s, and the extensive stock market speculation that took key during the latter part that same decade. The misdistribution of wealth in the 1920s existed on many levels. Money was distributed disparately among the rich and the middle-class, between industry and agriculture within the join States, and between the U.S. and Europe.This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920s kept the stock market artificially high, but eventually place to large market crashes. These market crashes, combined with the misdistribu tion of wealth, caused the American economy to capsize. The roaring twenties was an era when our country prospered tremendously. The nations total income rose from $74.3 billion in 1923 to $89 billion in 1929(end mention 1). However, the rewards of the Coolidge Prosperity of the 1920s were not shared evenly among all Americans. According to a study done by the Brookings Institute, in 1929 the screening 0.1% of Americans had a combined income equal to the bottom 42% (end note 2). That same top 0.1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all (end note 3). Automotive industry mogul Henry Ford provides a striking example of the unequal distribution of wealth between the rich and the middle-class. Henry Ford reported a personal income of $14 million (end note 4) in the same year that the average personal income was $750(end note 5). By present day standards, where the average yearly income in the U.S. is around $18,500(end note 6), Mr. Ford would be earning over $345 million a year This misdistribution of income between the rich and the middle class grew throughout the 1920s. While the disposable income per capita rose 9% from 1920 to 1929, those with income within the top 1% enjoyed a stupendous 75% add in per capita disposable income(end note 7).A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing outturn throughout this period.