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Depression

The Great Crash of 1929

FIFTY YEARS AGO, on Tuesday 29 October, the boom in the price of stocks and shares on the New York stock exchange came to an abrupt end in what has gone down in history as the Great Crash.

Stocks and shares are titles to ownership of part of a business. They entitle their owners to a percentage of the profits of that business in the form of dividends or, in the case of certain kinds of shares, fixed interest payments. In theory the price of a share reflects the value of the firm's assets. In practice it fluctuates with the firm's profit-making record and expected profits. It is this latter that introduces an element of gambling into shareholding, since the firm can never know in advance whether or not it will in actual fact make the hoped for profits. If it doesn't then the price of its shares will fall and the shareholders will suffer a loss. If it does then the price of its shares will increase and the shareholder will receive a capital gain as well as a dividend.

* The Capitalist * The Worker * The Class Struggle * Wages * Depression * Politics

Preface

Wage and salary earners have endless problems to worry about - problems of wages and prices, rents and mortgages, and how to provide against sickness, unemployment and old age. The usual attitude is to regard these problems as ones that can be dealt with by the trade unions or by new Acts of Parliament, and at each General Election the Labour, Liberal and Tory Parties tell the voters about the new laws they will introduce if they become the Government.

Date: 
1962

Cooking the Books 1: D-words

 D is for Depression. And for Deflation. Two words economists and journalists tried to banish. The first they replaced by the more innocuous-sounding "recession" while the second was confined to history books. But now they are having to use them again.

The Penguin Dictionary of Economics defines "depression" as "a business cycle in which there is unemployment" and then adds:

"Only the period 1929-33 in the United Kingdom is usually referred to as a depression (see Recession)".

Well, it looks as if they may have to add "and the period 2008- ", especially as even the Bank of England has raised the spectre of “deflation”, by which they mean a period of falling money prices.

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