Depresión De 1929

Depression in the 1930s

Depression affected and ruined million of persons in the whole world. For example only in the USA 50000 people were fired per day, and the farmers were so poor and their price of their products so low that it was more expensive to sell their products than let the crops get rotten. Moreover some historians mention that Depression was one of the main reasons of the SecondWorld War, leading with millions of dead, injured and disable people.

In the 1920s the USA was living a period of party called the “Roaring Twenties”, where people tend to spend and not to safe, there was big investment, confidence in the growth of the economy, lows levels of unemployment, the industrial production expanded, the profits and wages were increasing, there was technologicalimprovements, the trade was very active and the business activity was high. Although there was many reasons why the USA changes from Boom to Gloom. For example the weaknesses in the midest of prosperity, unequal distribution of wealth, industrial overproduction, trade problems and huge problems in the stock market.

One of the reasons why the depression arrived to the USA was the poverty of samesectors of the population like the farmers which were suffering a lot in the middle of the prosperity. The farm income dropped from 22 billion in 1919 to 13 billion in 1928. The problem was that Europe did not import food after the First World War because it was in crisis, also farmers suffered great competition of the Canadian wheat producer. Furthermore there was overproduction, so most of the 50% ofthe farm prices fell.
Other sector that was affected was the black people and the new immigrants, which were discriminated. Also the workers of the old industries such as the coal workers who lived in poverty. All these people were the 32% of the population of the US.
Another problem was the unequal distribution of wealth, it had been estimated that the 42% of the Americans livers below thepoverty line and could not afford essential needs as food and shelter. More to the point there was an industrial overproduction, the new mass production methods extended the production of consumer goods, by the end of the 1929 the American market got saturated, more goods were being produced than there were sold, and even those who could afford them, already got them. Consequently, when the goodsstockpiled in the factories their prices decrease, so to stay profitable the companies started to laid off workers leading to unemployment or cutting down wages, as a result a further drop in demand, thus prices decrease to stay profitable; it was a cycle leading to more unemployment. One solution could be to export the surplus, however in this case it was not a solution because Europe was still indebt with the US and it put protectionist policies as well as the United States did in the 1920s.

In addition the trigger cause of depression was the problems on the stock market, which led to the Wall Street crash. One of the problems was the reckless speculation of small investors. Shares seemed a quick way of getting rich, subsequently many Americans played the market, in 1920 there had beenonly 4 million shareowners; by 1929 there were 20 million out of a population of 120 million. The Americans could buy shares on the margin, this meant that they only had to put down 10% of the cash needed to buy shares and could borrow the rest, also they could borrow it from banks, so playing the market was easy and without complications. Even banks bought shares. Therefore the speculation waswithout control and pushed prices up to a certain extend that shares did not reflected the real condition of industries, which products were being stockpiled. Hence, when in October 1929 some well informed investors started to sell heavily; small investors panicked and rushed to sell their share and the prices decrease in a great sum. Consequently to stop the great selling, big investors bought...