sam007mama asked:
1. Big Business
2. Concentration of Wealth
3. Unwise Stock Market Investors
4. Consumers Buying on Credit
5. Government
BRADY
1. Big Business
2. Concentration of Wealth
3. Unwise Stock Market Investors
4. Consumers Buying on Credit
5. Government
BRADY
WARREN
I’m positive four is the most important. We just learned that in American History.
Comment by romancexxmy2 — April 11, 2010 @ 5:53 pm
DAMON
3,4, political instability, strong economic problems in Europe
Comment by OldGringo — April 12, 2010 @ 11:37 am
HUNG
i think 3, 4, and 5.
Comment by mandy41120062007 — April 15, 2010 @ 11:34 am
BRAD
3
Comment by hapoelhapoel — April 16, 2010 @ 10:53 pm
ARNOLD
gotta be 4
Comment by pikora — April 17, 2010 @ 1:36 pm
LELAND
I’m dittely sure that #2 contributed the most to the Great Depression b/c everyone invested most if not all of there money into the stock market and a majorety of those people were wealthy and people who invested wanted 2 become wealthy so it all makes since.
Comment by Booky524 — April 17, 2010 @ 10:13 pm
RANDOLPH
It was a combination of #’s 3 & 4.
People started buying on margin; meaning all they had to do was pay 10% to keep their accounts current.
However, once the stock market plunged, and the full amount was called, people could not pay their bills; thus, the cause of the Great Depression.
This is how it was explained to me.
Comment by MenifeeManiac — April 21, 2010 @ 6:37 am
SCOTTIE
3. People could easily buy on margain, but when the price dropped, they owed more on the stock than what it was worth.
in the years since, this was tightened up to the point where you could still but on margain, but had to have a margain acct, so if the stock dropped,you had the cash to cover your acct.
Comment by mdk — April 21, 2010 @ 2:06 pm
CHARLES
The main factor in bringing about the Great Depression was unwise stock market investment. During the ‘roaring twenties’ there was a ‘get-rich-quick’ attitude, and many people did make large amounts of money almost overnight in stock investments. Prior to this time, stocks and bonds were largely the parvenu of economists, and wealthy persons who had access to personal advise and often had insider tips in the market (which are, today, illegal). Suddenly, the average person realized that he (or she) too, was able to play the market. Penny stocks abounded, along with the more conservative stocks. People took a flyer on almost anything and, as the economy rose swiftly, it seemed almost impossible to lose. Then suddenly, reality caught up to and broke the bubble. Stocks plunged far below their true values, institutions and private fortunes were wiped out and the ‘little guy’ who had invested ‘way over his head, found himself penniless. As businesses ran into trouble, they laid off staff. And people with no jobs have no buying power, so other businesses also fell victim. And so it went, like a house of dominoes.
Part of the problem was that (4) much, if not most, of the buying was done on credit, and when the stocks were going up it wasn’t a problem. Simply buy 100 shares of something on a 10% margin, wait for the stock to go up, sell enough to pay off the investment and you were sitting pretty. But once the stocks started to slide, it was impossible to sell them for even the original amount, much less to make a profit. And that’s when people really started to get in trouble because instead of being ‘paper millionaires’ as they had been just weeks previously, they were now not only bankcrupt but owed vast amounts of money and had no way to repay.
The stock market investments, wise or unwise, wouldn’t have been that critical were it not for the fact that investors could buy in with so little actual cash to back them up. But buying stocks on the margin was not the same as what consumers do today when they buy on credit.
Comment by old lady — April 24, 2010 @ 2:36 am
GILBERT
2
Comment by timdadevilsfan — April 25, 2010 @ 10:36 pm