The Great Depression and the new deal on african americans

[Name]

[Instructor]

[Course]

[Date]

The Great Depression and the New Deal on African Americans

Introduction

The Great Depression was a by-product of the roaring twenties . During the 1920 's the United States economy flourished and the American people spent money freely . In October of 1929 the free spending ended . The stock market suddenly crashed and people throughout the United States were affected . There were four major contributing factors to the stock market crash and the ensuing Great Depression . A combination of stock speculation , buying stock on margin , an

inequitable distribution of wealth , and economic nationalism led to a nightmarish reality check for investors . An era of fast money and lavish living quickly changed to an era of economic hardship in which people had to struggle to stay financially solvent

The first factor that led the country to the Great Depression was stock speculation , that is , investors buying stocks only because they felt they could make a quick turnaround . Through most of the 1920 's the stock market consistently rose . Many Americans felt the urge to invest their money in a surefire method of success . By 1929 almost 4 million people owned stocks in the United States (Badger ) The investors were not conducting thorough investigations of their purchases they were quickly investing their savings on a stock in hopes of reselling it rapidly for a tidy profit . Unfortunately , people were ignoring the potential risks involved in stock speculation . As a result , people who could ill afford a financial setback actually lost much of their savings . The inexperienced investors were unprepared for the possibility that they could lose their investment . The stock market was an inherently dangerous place to risk a person 's entire economic portfolio . The risks involved in placing a substantial portion of one 's savings in the stock market would soon become apparent to many investors

The second factor that pushed the United States towards the Great Depression was the over - willingness of financial corporations to extend credit to people who wished to invest . One popular option was the process of buying stock on margin . The thought behind buying stock on margin was that an investor would purchase a stock for 10 - 25 percent of the purchase price (Edsforth ) As the value of the stock increased the investor would then sell his stock and repay the loan company . The system functioned as long as the price of stocks continued to rise allowing the investor to pay off the loan . Regrettably , when the stock market crashed , the stock investments did not grow in value they actually shrank . Therefore many people ended up owing more money than they had invested . The results would be disastrous for the people of the United States (Kennedy

The third factor that led to the Great Depression was an inequitable distribution of wealth amongst American citizens . The wealthiest Americans basked in the glory of the roaring twenties while the majority of the American population struggled to reach material success . Between 1918 and 1929 the share of...