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Word Count: 465
JOHN KENNETH GALBRAITH--THE CAUSES OF THE GREAT CRASH In this article the main economic factors that contributed to the collapse of the economy are examined 1921-29 The US was prosperous We had cars roads radios flight and modern construction had begun The income was unequally distributed Worker output rose while prices and wages remained static thus mainly businesses profited Secretary of treasury Andrew Mellon reduced income taxes to benefit the rich Those who received the highest incomes had increased throughout this time of prosperity Also it owned a quarter of the US wealth Hence The US was extremely dependent on the spending of the rich The unions were made weak due to the red scare The steel industry was still working a 12 hour day This was ended by President Harding after he pressured Judge Gary head of the US Steel Co We became the worlds greatest creditor after WWI We had to import more than export otherwise we had to forgive the debts The balance maintained through new foreign loans This led to the weakening of the buying power of those who depended on exports and bond owners would suffer These corporate companies relied on the ultimate holding company If anything happened to it every1 was screwed The stock market was booming and could buy on margin which means that one could extend his holdings by borrowing funds Loans increased at the rate of 400000000 a month and the interest on them was about 7-12 Catch the boom was self-liquidating It could last only as new flowed into the market Once the supply of began to falter the market would cease to rise and many would cash in It crashed in October of 1929 Black Tuesday It could have been forseen because it had happened repetively with the South Sea Bubble John Laws Speculations and the Florida land boom There had been a similar frenzy but in the end it collapsed It
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