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The Great Depression

The Great Depression was the worst economic slump ever in U.S. history,
and one which spread to virtually all of the industrialized world. The
depression began in late 1929 and lasted for about a decade. Many factors
played a role in bringing about the depression; however, the main cause for
the Great Depression was the combination of the greatly unequal distribution
of wealth throughout the 1920's, and the extensive stock market speculation
that took place during the latter part that same decade. The maldistribution
of wealth in the 1920's existed on many levels. Money was distributed
disparately between the rich and the middle-class, between industry and
agriculture within the United States, and between the U.S. and Europe. This
imbalance of wealth created an unstable economy. The excessive speculation in
the late 1920's kept the stock market artificially high, but eventually lead
to large market crashes. These market
crashes, combined with the maldistribution of wealth, caused the American
economy to capsize.
The U.S. economy was also reliant upon luxury spending and investment from
the rich to stay afloat during the 1920's. The significant problem with this
reliance was that luxury spending and investment were based on the wealthy's
confidence in the U.S. economy. If conditions were to take a downturn this
spending and investment would slow to a halt. While savings and investment
are important for an economy to stay balanced, at excessive levels they are
not good. Greater investment usually means greater productivity. However,
since the rewards of the increased productivity were not being distributed
equally, the problems of income distribution were only made worse. Lastly,
the search for ever greater returns on investment lead to widespread market
speculation.
Mass speculation went on throughout the late 1920's. In 1929 alone, a record
volume of 1,124,800,410 shares were traded on the New York Stock Exchange....