Text B  The Great Depression

1. The 1920s “boom” enriched only a fraction of the American people. Earnings for farmers and industrial workers fell. While this represented lower production costs for companies, it also precluded（妨碍） growth in consumer demand. Thus, by the mid 1920s the ability of most Americans to purchase new automobiles, new houses and other durable goods was beginning to weaken.

 2. This weakening demand was masked, however, by the “great bull market" in stocks on the New York Stock Exchange. The ever-growing price for stocks was, in part, the result of greater wealth concentration within the investor class. Eventually the Wall Street stock exchange began to take on a dangerous aura (氛围) of invincibility（无敌）, leading investors to ignore less optimistic economy.

 3. The crucial point came in the 1920s when banks began to loan money to stock-buyers. Banks allowed Wall Street investors to use the stocks themselves as collateral（抵押品）. If the stocks dropped in value, and investors could not repay the banks, the banks would be left holding near-worthless collateral.

 4. But that "doomsday" idea was laughed off by analysts and politicians who argued the U.S. stock market had entered a "New Era" where stock values and prices would always go up. That, of course, did not happen.

 5.  In October 1929，the New York Stock Exchange' s house of cards collapsed in the greatest market crash seen up to that time. People are often surprised to learn that the stock market crash itself did not cause the rest of the economy to collapse. But, because American banks had loaned so heavily for stock purchases, falling stock prices began endangering local banks whose stock-buying borrowers began defaulting（违约）on their loans.

 6. Banks are the pumping stations（加油站） or hearts of the capitalist society. As hundreds then thousands of banks failed between 1929 and 1933, the economy's money supply began to dry up. During the worst years of the Depression, 1933 --1934，the overall jobless rate was twenty-five percent with another twenty five percent of breadwinners having their wages and hours cut. Effectively, then, almost one out of every two U. S. households directly experienced unemployment or underemployment.

 7. Scholars tend to view the Depression and New Deal differently depending on their own ideological perspective.

 8. Conservative historians place a high value on the ideal of laissez-faire. Thus, the Depression was simply a painful but necessary market correction, which would have corrected itself if left alone.

 9. For other historians, the Depression represents the failure of laissez-faire, but not capitalism itself. They value capitalism and democracy, asserting that democratic governments must be responsive to the social needs of the people. For them, the New Deal represents another American Revolution leading to the empowerment of previously powerless groups and laying the foundation for a humane welfare state.

1. Questions for Discussion or Reflection

(1) What were the causes of the Great Depression?

(2) “The Depression was simply a painful but necessary market 

      correction which would have corrected itself if left 

      alone.” What is your comment on this quotation?

(3) After the Great Depression, what were the opinions and 

     reflections of people from different backgrounds, such as scholars, 

     conservative historians, and students?

 

2. Reading Comprehension

(1) Which of the following description is NOT correct according to 

     the text?

A. In the 1920s, the“boom" made only a small part of the 

     Americans rich.

    B. People are not surprised to learn that the stock market crash 

        itself did not cause the rest of the economy to collapse.

C. Banks were just like the pumping stations or hearts of the 

     capitalist society.

D. The collateral was nearly worthless when the stocks dropped in 

     value.

(2) Which of the following is the most important cause of the Great 

     Depression?

A. The bank loaned money to stock-buyers.

B. Earnings for farmers and industrial workers fell.

C. The bubble of the stock market blasted.

D. The ability to purchase durable goods was beginning to weaken.