Essay 2

Essay: #1 Overproduction And Its Weakness Essay, Research Paper

There were many problems that occurred as soon as WWI ended. Such as

overproduction.

Overproduction was going on all through the war, and it did not stop as soon as

the war came to an end. The reason overproduction came into effect in the first place,

was because america had to feed the soldiers and the allies, therefore, the goverment

constantly pushed farmers to grow more crops.

When the war was over, instead of decreasing the crop amount, farmers grew the

same number of crops. Not as many people were in America, therefore, less people

bought less amounts of food. In order for people to buy more food, the goverment

believed that if the prices plummeted, the sales would increase, unfortunately, it did not

happen that way.

Overproduction not only hurt the farmers, but it also hurt the rest of the economy.

Since the food was not selling well, the stores began to order less food from the farmers.

Since the farmers were not making quite as much money, they had to do either of the three

following things: A) Lay off workers

B) Reduce their pay

C) Cut down on maintenance of machinery.

If any of those possibilities were done, then the workers would not have extra spending

money. Therefore, they would not be able to go to the store and buy as much food as

necessary, therefore, the gradual domino effect continued.

Overproduction not only hurt the manufaturers but it also greatly hurt the citizens

that lived in the USA. Overproduction was also one of the leading ?sparke? that set of the

Great Depression.

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Essay #2

The Stock Market Crash of 1929

In the 1920?s many people relied on the stock market. Many people wanted to get

rich fast, others just wanted to get some extra cash. It was believed that the easiest way to

do so was to invest in the stock market.

The stock market works in the following way: A person believes that a certain

company is doing very well, therefore, that person goes out and buys himself a share (a

portion) of the company. In order for the person to own a share, he must have enough

money to buy it. Unless, this person decides to buy on margin, which means loaning

money from the bank, when you earn the money back, you promise to repay the bank.

After the investor buys his portion, he begins to see that it is going up in cost. Right then

he knows that he must go sell it for a price higher than he bought it for.

This process was thought to be a ?get rich scheme.? Many people invested in the

stocks and prospered greatly Others lost everything that they had due to the stock

market..

Some of the people that bought these stocks were taking a big risk. They usually

bought the stock for a very short term. They would buy and sell the stock(s) very quickly

hoping to make millions of dollars. Therefore, without thinking about it, they would buy

the stocks on margin, assuming that they would get loads of, money and be able to pay the

banks back in full. Unfortunately, thus was not always true. If the week the investor

bought a share and it plummeted, the owner or investor would lose all the money he

invested in this small share. He would not be able to repay the bank, this put the investor

in debt.

Before 1929, all was well. People put money into the market, and most of the

time they prospered. Since the market was doing so exceptionally well, it was named the

?Bull Market.?

People did not think that others would stop buying shares, therefore, many

invested their life-savings. Unfortunately, in the summer of 1929, all turned against the

investors. People began to get more cautious with their money. They saw that the prices

of shares were dropping, so they did not feel the need to buy anymore stock. Others just

lost most of their money in this small gamble. Those who lost the money were usually

also in debt with the bank. The bank was losing its money thanks to the speculators, the

?get rich quick people.?

People began to sense the great dangers of the banks losing its money, they sensed

that if the bank lost enough money they would go out of business

On Black Tuesday, the stock market crashed due to the loss of its investors.

People rushed to the banks to get whatever was left of their money, but it was to late

because the banks were already shut down, for good.

People were left homeless, jobless and poor. In order for them to get back on their

feet they began to look for jobs. Many qualified people were searching for jobs,

unfortunately, only a few were able to get a job to get them stable. The people that did

not have jobs were left poor. There were so many of these people, that in 1929, the Great

Depression began!