Dangerous Frivolity of The Time

The dollar and the British pound sterling was weak. The devaluation of the British pound was the last straw that turned the slump of 1929-1931 into the Great Depression (Bladen 357).

Many analysts believe the real cause of the Great Crash and the Depression was an excessive burden of debt. Before the first world war, people, businesses, and governments borrowed mainly to finance the productive facilities that provided their own means of repayment through economic growth. However since then, they borrowed for more dubious reasons (Bladen 357).

World War I was tremendously costly and destructive, and afterward the voters in most European countries refused to accept that it had left them too poor to return quickly to their prewar standard of living. So their governments borrowed and spent for the new purpose of maintaining incomes. Moreover, the voters in countries that had gained markets when Europe stopped working and started fighting refused to give them up when the fighting stopped. So their governments borrowed to finance commodity price stabilization pools and other schemes to maintain the production of unsalable goods for the account and risk of the taxpayers (Bladen 357).

In conclusion, the stock market crash of 1929 was the result of many causes. One of them was the devaluation of the British pound sterling, and the problems the British had in maintaining their status as banking leaders. The huge buying of stock on margin was another cause. The poor condition of the economy, the questionable business practices of the Exchange and its practitioners, and the lack of vision of the Federal Reserve and the government also contributed to the crash.

Many analysts state that there were a host of lost opportunities that if they had been taken would have averted the crash. For example, if the Federal Reserve had been less timid in the early part of the decade, many abuses in the call money market might have been avoided. If Andrew Mellow had been less concerned with correcting what he considered evil laws and policies of the Progressive era, and had a better knowledge of economics and less of a dedication to the business community's short-range goals, he might have proposed different types of tax reforms. If labor and the farmer had received higher wages and returns for their products, then the economy would have been stronger, and better able to cope with recessions. If businessmen had not become convinced that credit was the only way to prosper, and the consumer was made to see that credit could be harmful to them, it might not have been abused.

 

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