The Stock Market Crash of 1929 was in the majorities opinion, a long and overdue crash that was bound to happen. Prices sky-rocketed so high that when they reached what was believed to be it's all time high, most people sold their gaining stocks for a profit. So many people sold their stocks at a rapid rate that the corporations were unable to pay the shareholders. Speculation arouse months before the crash when Roger Babson made his speech at the annual National Business Conference which he said "..... Sooner or later a crash is coming which will take the leading stocks and cause a decline from 60 to 90 points in the Dow Jones Barometer." This and many others speeches like this scared p

Many policies that the government put out hurt and slowed the recovering economy. One act known as the American Hawley-Smooth of 1930 crushed the European industry which was already unstable from the depression. It stopped European trade and prevented European from earning the almighty dollar. This Act also destroyed any possibilities of regaining the money loaned to them during World War I.

2). Garraty, John A. The Great Depression. Harrcourt Brace Jovanovich Publishers. 1986

Economists recognized the depression as a cycle in which there were four cycles; expansion; crisis(or panic); recession (or contraction); and recovery. The definitive description was made by Wesley Clair Mitchell of the University of California. A cycle Mitchell explained in Business Cycles(1913) was "the process of cumulative change by renewal of [Economic] activity develops into intense prosperity by which the prosperity engenders a crisis, by which crisis turns into depression and by which depression finally leads to.... a revival of activity."

Banks played a significant role in the depression because they were in charge of all the money and interest rates. For example when banks had large reserves, they lowered interest rates. Cheaper loans encouraged manufactures to invest in new equipment and hire additional workers. The resulting expansion of production caused an upswing of the cycle. The increased borrowing eventually reduced the bank's reserves, thus resulting in a drastic increase of interest rates. That discouraged investors and slowed the economy down. Another good explanation was the bad distribution of wealth for the cycles. During these challenging and difficult times the rich opted not to spend there money: they saved in banks, vaults, etc. This resulted in increased investments, more production, and eventually more goods piled up on shelves and warehouses. Prices fell, production was cut back and workers were discharged. As a result, the economy entered the depression phase of the cycle.

The United States was and still is a great power in the world's manufactured goods - twice as much as Great Britain and Germany combined. When American producers cut back on their purchases of raw materials and other supplies, the effect on other countries was devastating. The policies of the Federal Reserve Board in the early 1930's put added pressure on European currencies. After Great Britain was again forced to leave the gold standard in 1931, many foreign banks withdrew deposits from America in the form of gold: they were afraid that the United States might go off the gold standard too. "When the Reserve Board raised the discount rate to discourage these withdrawals it inadvertently exacerbated the deflationary trend, thus deepening and prolonging the world depression." The America delfation was probably the cause of much of the deflation that took place elsewhere and t

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Approximate Word count = 1960
Approximate Pages = 8 (250 words per page double spaced)