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Cause And Effect Of The Great Depression

             The Great Depression started in 1929 when the economy of the world suffered an enormous drop in output and an outrageous increase in unemployment. It continued in a downward direction until 1932 when it hit bottom at 50% of its 1929 level. Unemployment elevated, in the United States as it peaked at 24.9% in 1933. It stayed above 20% for at lease two more years, and continue to decline to 14.3% by 1937. It then jumped back to 19% before its drastic decline. During that time most households had only one income per the equivalent modern unemployment rates would likely be much higher. The overall economic output (real GDP) declined by 29% from 1929 to 1933 and the US stock market lost 89.5% of its value. The Great Depression had the highest, worst and longest period of high unemployment ever recorded to date. During an economic depression, all labored institution reduced its labor force to the minimum, stores close, and small businesses and farms fall into ruin. The United States has experienced short periods of depression followed by periods of prosperity, but the Great depression of the 1930's was a 10-year long nightmare. (The Great Depression, Pg. 3) The core of the Great Depression can be traced back to the New York Stock Exchange, and the year 1929. At the stock exchange private individuals (Brokers), banks, and businesses are allowed to buy and sell shares of corporations. The higher the stocks rose in value the more investors thought it was a good buy. This meant they would buy even more shares of the stock. As this kept continuing, the share prices were way above the real value in terms of the dividends they might produce. In 1928, a common share of Du Pont stock increased from 310$ to 525$ in one year. Montgomery Ward stock jumped from 117$ to 440$. But by 1928 while the prices were soaring, demand for manufactured goods was falling off, and just when shares were climbing most rapidly it seemed like the time for a crash.

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