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Paper Topic:

The main reason of the great depression was the unequal distribution of wealth

The nation-wide economic decline of the late 1920 's known as the Great Depression is considered to be the worst slump in United States history Lasting for almost a decade , the Great Depression was caused not by the Stock Market Crash of 1929 , but by factors such as the unequal distribution of wealth among the lower , middle , and upper classes leading to the unstable economy that developed throughout the 1920 's Combined with the lack of diversification among different independent industries as well as extensive stock market speculation , it was only a

matter of time until the expanding bubble that was the U .S . economy burst

The period of economic prosperity often referred to as the Roaring Twenties ' increased annual income from 74 .3 billion to 89 billion as reported by Gusmorino (1996 ) Unfortunately , this increase in income was not spread out evenly through all the working classes leaving upper classes with an average income 75 percent greater than that of the lower classes . For example , automobile mogul Henry Ford reported his annual income to be at 14 million dollars in 1929 when lower working class families only made 7 ,500 . As time progressed , this gap would only continue to grow , with wages among workers increasing at a rate that was far slower the industrial productivity at the time

Why was this gap between incomes significant in creating an unbalanced economy ? The major problem was that as the rich continued to get richer few of the profits made were seen by the lower working class Furthermore , the rich were beginning to produce far too many goods than needed and had left the poor too poor to buy them . Although cost eventually went down , and wages in turn went up , there was not a fast enough growth in income among the lower classes to keep up with growing supply . Instead of giving back to the workers , industrialist used most of the profits resulting from the increased productivity to reinvest in more of the same industries (i .e , the profits made in automobiles were reinvested more factories , the tire industry , etc ) This created more plant space than could profitably be used and resulted in a false sense of economic prosperity when instead it was setting up for future failure

For an economy to be stable there must be an equal amount of demand to the supply . With the increased in production of goods , particularly in both the automobile and radio industries , both of which were booming at that time , soon there was a car and radio to every single American family . What industrialist failed to realize at the time was that although the average middle-class family would not be able to afford more than one of each product , the rich upper-class family , which made 4 times as much annually would not likely purchase 40 radios or automobiles to satisfy the demand needed to keep companies in business

However , there were many solutions to the dwindling need for demand one of which was...

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