HIS 405 Week six the great depression
Introduction
Causes of Greate Depression
The causes of the Great Depression were complex and multifaceted. By the end of the 1920s, the American economy was flourishing. However, one of the major issues was an imbalance between supply and demand. Industries like textiles, mining, and farming faced the challenge of overproduction and a lack of demand. The decline in automobile production further affected industries such as steel and rubber. Wages for working-class individuals remained low, and the economy heavily relied on consumer purchasing power, which was limited due to financial constraints. Import taxes made imported goods unaffordable for the average person, leading to reduced competition.
Additionally, other countries imposed tariffs on American products, further reducing sales. This lack of demand and surplus of products was particularly significant in the agricultural sector, where farmers had expanded their land and production during the high-demand period of World War I. However, after the war, they were left with excess produce and a shortage of buyers.
HIS 405 Week six the great depression
Stock Market Crash
The stock market crash of 1987, commonly referred to as Black Monday, was a significant event that holds similarities to the Great Depression. Taking place on October 19, 1987, it was one of the most severe stock market crashes in history. While the crash occurred just a few months before the narrator’s trip to Australia, they were unaware of its impact at the time. This crash was even worse than the one that triggered the Great Depression in the 1930s.
During the narrator’s trip, the value of the dollar against the Australian currency was favorable, with each dollar being worth approximately $1.50. However, upon returning home, they realized that the crash had affected the value of their credit cards, which were now worth only half of what they had paid for their purchases. Despite experiencing these financial fluctuations, the narrator admits to not fully comprehending the significance of these events.
HIS 405 Week Six the great depression
The parallels between the stock market crash of 1987 and the Great Depression lie in the economic downturns they caused. Both events had profound effects on the economy, leading to widespread financial instability and economic hardship for many individuals and businesses. However, while the narrator acknowledges the impact on their personal finances, they express uncertainty about fully grasping the broader implications and lessons of these economic crises.
Black Monday, the stock market crash of 1987, was influenced by various factors. One notable aspect mentioned in the article is the emergence of computer trading, a phenomenon that did not exist during the 1920s. Large institutional investing companies were utilizing program trading, which involved programming computers to execute significant stock trades based on specific market trends.
However, it is important to note that while program trading played a role in the 1987 crash, studies have shown that other stock markets around the world, which did not employ program trading, also experienced severe crashes. In fact, some of these markets suffered even greater losses than the U.S. market did during that time.
HIS 405 Week Six the great depression
The Influence of Technology on the Stock Market
The mention of computer trading raises questions about the influence of technology on the stock market and the potential risks associated with automated trading systems. The article suggests that while program trading may have contributed to the crash, it is not the sole cause, as other factors were at play.
By acknowledging the complexities of the crash and the limitations of attributing it solely to computer trading, the article highlights the need for a comprehensive understanding of the events leading up to Black Monday. It encourages further exploration of the multiple factors and dynamics that contributed to this significant event in financial history.
References
Itskevich, J. (2002). What caused the Stock Market Crash of 1987? Retrieved from
https://historynewsnetwork.org/article/895
Keene, J. D., Cornell, S. T., & Donnell, E. T. (2011). Visions of America: A History of the United States (2nd ed.). [VitalSource]. Retrieved from
https://online.vitalsource.com/#/books/9781269721387/cfi/6/2!/4/16/46/2@0:0
The Great Depression. (2008-2018). Retrieved from http://www.ushistory.org/us/48.asp
