While the Great Depression marked a tragic time of economic struggle for millions of Americans, it also allowed for an odd few to make their own fortune out of others' misfortunes. With thousands of businesses closing within the first few years of the depression, an individual's personal cost of starting a new business was a fraction of what it had been just months earlier. The closing of businesses often resulted in liquidation, and their assets could be purchased at minuscule prices. New startups took advantage of these sales, and soon they were on their feet at much, much cheaper costs than would have been the case if the economy had been booming.
During the Great Depression, both businesses and real estate were at bottom price. Either could be purchased for far less than what their actual value would be in a healthy, and even stable economy. For those individuals with some money, these low prices were incredibly attractive. A house could be purchased and then sold just five years later for thrice the price, if it was bought at the right time. The same could be said for failing businesses. Many collapsing businesses such as Douglas Aircraft were purchased by those who had and were willing to spend the right amount of money. Often, if the company survived the depression, the payout was huge.
It seems that making money during the Great Depression entirely came down to timing. If you could "get in" while the prices were at a historical low, and survive the difficult climb back to stability, the reward was huge.
Dylan, it is very interesting to see how even in the worst of times, some people can find a way to benefit from it. There will always be those who persevere through difficult times and find ways to take advantage of the situation. I've always thought of the great depression as a country wide economic epidemic, so it is truly shocking to see how successful a select few were.
ReplyDeleteAs Mr. Stewart mentioned in class Joseph P. Kennedy was one of the men that bet correctly on the stock market crash in 1929. It is said that Kennedy survived the crash "because he possessed a passion for facts, a complete lack of sentiment and a marvelous since of timing." During the Great Depression Kennedy increased his fortunes by investing in real state, in 1929 he had a meager $4 million while in 1935 his wealth had ballooned to 180 million.
ReplyDeleteIt's nice to know that not everyone in the country was suffering from the depression, and at least some people were able to benefit from the economic situation the country found itself in. Even in a time when most people thought capitalism had failed, people who took risks and made good financial decisions were able to inflate their wallets and benefit from the depression.
ReplyDeleteLooking at millionaires during this time, there are actually some noticeable names that are still popular today.An example of this are Bill Hewlett & Dave Packard who started their own business in their garage until they had officially become business partners in 1939. What was most surprising about this though was the fact that they started with 538 dollars worth of investment money.
ReplyDeleteSource:http://greatdepression.hubpages.com/hub/Great-Depression-Millionaires
I agree with Thomas how it's really interesting how people somehow manage to find a way to make the best out the the Depression. It's literally turning a negative into a positive because billionaires that have the money to invest have the perfect opportunity to buy low and sell high later. An example of this is Charles Mitchell who is interpreted to be both the hero and devil behind the stock market crash of 1929. While he did invest a large sum of money into the stocks and temporarily stop the panic, the crash only got worse later when October arrived due to Mitchell having made illegal transactions and speculating in his own bank securities to benefit himself. Thus, the success of the few select ultimately lead to the further decline of the nation's economy as a whole.
ReplyDeleteI find it very interesting that there were still major economic advancements for people even during the Great Depression. While most of the country underwent severe economic woes, there were the few that benefited greatly and became more wealthy than they ever have through the lowest point of economic stability the country had ever faced. The Depression is always looked at as a major problematic time for everyone effected, and never considered to have positive effects for a select few individuals who bought and sold at the correct times for economic growth. So in many ways, someone may say the Great Depression was a high point in economics, but as far as these successful people go, it did not happen often. But, even though these people gained economic greatness, this made the country suffer more because they basically sponged up the economic circulation thus eliminating the ability for others who do not have wealth to gain wealth, and this is what made the Depression sink even more. There were small wins during this time period, but these very small wins ultimately and inevitably had an opposite and negative reaction on the rest of the country.
ReplyDeleteI completely agree with the fact that making money during the great depression was hugely affected by timing, but how do you think someone would be able to figure out when the times would be that the market would stop/continue to crash. For instance we are in a pretty large recession right now and from what this is saying is that we should all buy real estate right now because prices dropped. Our current recession was strongly linked with the real estate market and I do not think that buying up all the real estate because they have gone down from the incredible peak that they were at a few years ago is a good idea. I really just would like to know if there were any methods that were successful in regards to figuring out the timing because it seemed to me that it was probably and will continue to be random in the future.
ReplyDeleteI believe that is amazing that people could become rich out of an event that brought so much hurt to so many Americans. When you look at it, it makes complete sense that people could become rich because the price of stock became so low that if you bought it at its low, your investment would multiply in the following years. This is in fact how the Kennedy family went from a poor Irish immigrant family to one of the most powerful families in America. When you look at it that way, the depression shaped America even more than you can see at first glance, because the wealth made by the Kennedy family from the depression made it possible for JFK to become president, and he obviously was one of the most influential presidents ever.
ReplyDeleteI wonder what happened to the millionaires that earned their fortunes during the Roaring Twenties. As the documentary video that we watched said, "the number of millionaires increased by 400%". I think that's what sets good and bad times apart. In good times, it's possible for a large number of people to acquire wealth and become financially sound. In times of crisis, this isn't a luxury available to everyone. Only a few are able to get rich, sometimes astoundingly so, and often at the expense of others.
ReplyDeleteI think that you could compare these millionaires to the noveau rich, or the New Russians, who gained their fortunes when they took advantage of the chaos in the economy after the USSR was dissolved.
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