Which of the following is considered to be an early sign of the Great Depression? ( point)
The Great Depression, which began in 1929 and persisted well into the late 1930s, was precipitated by a number of signs and events. Here are some early indicators that suggested the onset of the economic downturn:
1. Stock Market Speculation: In the late 1920s, the stock market experienced rapid growth and excessive speculation. Many people invested money they could not afford to lose, and some even bought stocks on margin (with borrowed funds), leading to an inflated market.
2. The Stock Market Crash of 1929: Known as "Black Tuesday," October 29, 1929, marked the dramatic fall of stock prices, which was a triggering event that signaled the beginning of the Great Depression.
3. Overproduction of Goods: During the 1920s, businesses produced more goods than could be sold, leading to surplus inventory and eventually to reduced production and layoffs.
4. Agricultural Sector Collapsing: Even before the Depression, American farmers were struggling due to surplus production, fallen agricultural prices, and deep indebtedness. The Dust Bowl later in the 1930s further devastated the agricultural sector.
5. High Levels of Debt: Both consumers and businesses accumulated high levels of debt during the prosperity of the 1920s. With the downturn in the economy, many found it challenging to repay those debts.
6. Uneven Income Distribution: A relatively small percentage of the population held a significant portion of the overall wealth, which meant consumer spending was not sufficient to keep the economy robust, as most people did not have significant disposable income.
7. Bank Failures: Banks that had made loans to stock market speculators faced serious problems once the stock market crashed, leading to a loss of confidence among depositors and resulting in bank runs and closures.
8. International Trade Issues: The United States and other countries raised tariffs in an attempt to protect domestic industries. The Smoot-Hawley Tariff Act of 1930 contributed to international trade tensions and reduced trade, exacerbating the global economic downturn.
While there were numerous contributing factors and early signs, these are some of the key indicators that economic trouble was looming, eventually culminating in the Great Depression.