ed. One culprit to blame is the Federal Reserve Board's decision in early 1927 to lower the rediscount rate one-half point to 3.5 percent.Sellers 2The decision was based on the need to save liquidity in the wake of Great Britains overvaluation of the pound. This meant easier money at home which made stock speculation easier, yet did not cause speculation (McElvaine 44). Another factor that lead to the Great Depression was shortsighted government economical policies. This meant that the government took no actions against unwise trading and investing. Congress also passes high tariffs that protected American industries but hurt farmers and international trade (http://www.bergen.org/AAST/Projests/depression/causes.html). Looking back many people believe that these tariff increase were a horrible mistake that made the Worldwide Depression worse (McElvaine 32).One of the bigger and most noted reason was the stock market crash of 1929 (http://www.bergen.org/AAST/Projests/depression/causes.html). Prices had been drifting downward since September 3, but generally people where optimistic. Speculators continued to flock to the market. Then, on Monday October 21 prices started to fall quickly. The volume was so great that the ticker fell behind (McElvaine 47). Investors became fearful. Knowing that prices were falling, but not by how much, they started selling quickly. This caused the collapse to happen faster. Prices stabilized a little on Tuesday and Wednesday, but then on Black Thursday, October 24, everything fell apart again. By this time most major investors had lost confidence in the market. Once enough investors had decided the boom was over, it was over. Partial recovery was achieved on Friday and Saturday when a group of leading bankers stepped in to try to stop the crash. But then on Monday the 28th prices started dropping again. By the end of the day the market had fallen 13%. The next day, Black Tuesday an unprecedented 16.4 million s...
