Causes of the Great Depression
The Great Depression also called Depression of 1929, or Slump of 1929, began in 1929 and lasted until 1939. It was the longest and most severe depression ever experienced by the industrialized world. Though the United States economy had gone into depression six months earlier, the Great Depression may said to have begun with a catastrophic collapse of the stock market prices on the New York Stock Exchange in October 1929 call the Stock Market Crash of 1929. During the next three years stock prices in the United States continued to fall, until by late 1932 the had dropped 20 percent of their value in 1929 (http://www.britannica.com/bcom/eb/article/0/0,5716,38610+1,00.html).
More than a half-century after the fact, there is no consensus on that caused the Great Depression. The one thing that is really known about the Great Depression is that it had many under lying causes (McElvaine 26). Speculation in the 1920's caused many people to buy stocks with loaned money and the used these stocks as collateral for buying more stocks. Broker's loans went under $5 million in mid 1928 to $850 million in September of 1929. The stock market boom was very unsteady, because it was based on borrowed money and false optimism. When investors lost confidence, the stock market collapsed, taking them along with it (http://www.bergen.org/AAST/Projects/depression/causes.html).
It seemed to good to be true, and it was. The margin of leverage when prices were rising would act in reverse if prices fell. All of the margin buyers would be wiped out quickly. The whole market in 1929 compounded the leverage idea as "investment trust" proliferated. The investment trust existed for the sole purpose of owing stock....
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...lack Tuesday an unprecedented 16.4 million shares changed hands. Stocks fell so much, that at many times during the day no buyers were available at any price (McElvaine 48).
This speculation and the resulting stock market crashes acted as a trigger to the already unstable U.S. economy. Due to the misdistribution of wealth, the economy of the 1920's was one very much dependent upon confidence. The market crashes undermined this confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of loosing their jobs, and not being able to pay the interest. As a result industrial production fell by more than 9% between the market crashes in October and December 1929 (McElvaine 48.)
Bibliography:
McElvaine, Robert S. The Great Depression. New York: Times, 1984.
The stock market crash of 1929 is one of the main causes of the Great Depression. Before the stock market crash many people bought on margin, which caused the stock market to become very unbalanced, which led to the crash. Many people had invested heavily in the stock market during the 1920’s. All of these people who invested in the stock market lost all the money they had, since they relied on the stock market so much. The stock market crash also played a more physiological role in causing the Great depression. More businesses became aware of the difficulties, which caused businesses to not expand and start new projects. This caused job insecurity and uncertainty in incomes for employees. The crash was also used as a symbol of the changing times. The crash lead the American peop...
The stock market expanded rapidly during the period of 1921-1929. At this time investors were optimistic about the stock market, so they traded stocks, which caused the stock prices to rise. The stock market boom led to asset prices rising at a fast pace. Which in turn outweighed the true value of the assets. Eventually, since the stock market did not reflect the true value of the stock, this led to a huge bubble followed by a crash. This crash is also known as the Great Depression that led to a severe economic crisis in the United States.
There were many causes for the Great Depression. The first and one of the largest was the stock market crash. Before 1929 the stock market was flourishing and everyone wanted to buy stocks. People were so confident in the stock market that they were buying “on margin”, which meant that brokers would lend them 10% of the money they invested (D1). The problems began when stocks were being over speculated. When people began to realize this, they began selling there shares. On October 29, 1929, 16 million shares were sold (D9). This day became known as “Black Thursday”, the day the stock market crashed (D12). The second reason was the overproduction of goods. Factories had already produced too many goods and now there was no demand for them. The government began to raise tariffs to protect Canadian industries but things only led downhill from there.
A major cause of the Depression was that the pay of workers did not increase at all. Because of this, they couldn't afford manufactured goods. While the factories were still manufacturing goods, Americans weren't able to afford them and the factories made no money (Drewry and O'connor 559). Another major cause related to farmers. Farmers weren't doing to well because they were producing more crops and farm products than could be sold at high prices.
Great Depression was one of the most severe economic situation the world had ever seen. It all started during late 1929 and lasted till 1939. Although, the origin of depression was United Sattes but with US Economy being highly correlated with global economy, the ill efffects were seen in the whole world with high unemployment, low production and deflation. Overall it was the most severe depression ever faced by western industrialized world. Stock Market Crashes, Bank Failures and a lot more, left the governments ineffective and this lead the global economy to what we call today- ‘’Great Depression’’.(Rockoff). As for the cause and what lead to Great Depression, the issue is still in debate among eminent economists, but the crux provides evidence that the worst ever depression ever expereinced by Global Economy stemed from multiple causes which are as follows:
There were numerous causes and effects of the Great Depression. It was a divergent distribution of wealth. The nation’s wealth increased extremely but they did not distribute it evenly. The economy didn’t have any way of paying the money back. It created a financial crisis when Europe couldn’t purchase goods from the United States. It was mandatory for Germany to pay for World War I due to the Treaty of Versailles. This debt made the United States pass the Forney-McCumber Act which created high tariffs. There were a variety of reasons as to why the Great Depression started.
The Great Depression was the longest American slump in the economy to ever occur. The Great Depression lasted for about a decade between 1929 and 1939, the dates of the Stock Market Crash of 1929 and the starting of World War II. A number of factors actually caused the Great Depression. One commonly known factor said to have caused the Great Depression is the Stock Market Crash of 1929, although this is not directly correct. The market crash was only a symptom of, as well as a transition into, the Great Depression. Other symptoms and causes includes, wealth inequality, overproduction, stock speculation, excess loaning, deflation, unemployment, and no profits.
October 29th, 1929 marked the beginning of the Great Depression, a depression that forever changed the United States of America. The Stock Market collapse was unavoidable considering the lavish life style of the 1920’s. Some of the ominous signs leading up to the crash was that there was a high unemployment rate, automobile sales were down, and many farms were failing. Consumerism played a key role in the Stock Market Crash of 1929 because Americans speculated on the stocks hoping they would grow in their favor. They would invest in these stocks at a low rate which gave them a false sense of wealth causing them to invest in even more stocks at the same low rate. When they purchased these stocks at this low rate they never made enough money to pay it all back, therefore contributing to the crash of 1929. Also contributing to the crash was the over production of consumer goods. When companies began to mass produce goods they did not not need as many workers so they fired them. Even though there was an abundance of goods mass produced and at a cheap price because of that, so many people now had no jobs so the goods were not being purchased. Even though, from 1920 to 1929, consumerism and overproduction partially caused the Great Depression, the unequal distribution of wealth and income was the most significant catalyst.
During the years of 1914-1918 was “the greatest wars to end all wars” known as World War I that jumpstarted our journey towards the Great Depression. In this war it involved fighting in between nations, alliances, imperialism, militarism, nationalism, and assassinations. After all this fighting came the Roaring 20s. The Roaring 20s was a time period when many people defied prohibition, indulged into new styles and art, and the economy was at an all time high. Now imagine having a luxurious mansion and you leaving your family at home to go to work at your fancy job. Then you come home that evening and you’re all of a sudden broke. Unreal right? Well this was what happened to many families on October 29, 1929 when the stock market crashed and the Great Depression started. United States economy took a turn for the worst and brought about devastation which resulted into problems for the American people/government and them having to deal with it in different ways.
The Great Depression is said to be the worst economic crisis in the U.S. It is said that World War 2 ended the Depression. With better balanced markets and lower taxes, the Depression seemed to be over.
What were some of the causes of the Great Depression? What made it so severe, and why did it last so long?
The stock market crash of 1929 was the primary event that led to the collapse of stability in the nation and ultimately paved the road to the Great Depression. The crash was a wide range of causes that varied throughout the prosperous times of the 1920’s. There were consumers buying on margin, too much faith in businesses and government, and most felt there were large expansions in the stock market. Because of all these positive views that the people of the American society possessed, people hardly looked at the crises in front of them.... ...
] This catastrophic event is caused by the accumulation of a large scale of speculation by not only investors but also banks and institutions in the stock market. Though the unemployment rate was climbing during the 1920s and economy was not looking good, people on Wall Street were not affected by the depressing news. The optimism spread from Wall Street to small investors and they were investing with the money they don’t have, which is investing on margin as high as 90%. When the speculative bubble burst, people lost everything including houses and pensions. The main reason ...
The Great Depression was the deepest and longest-lasting economic downfall in the history of the United States. No event has yet to rival The Great Depression to the present day, although we have had recessions in the past, and some economic panics, fears. Thankfully, the United States of America has had its share of experiences from the foundation of this country and throughout its growth, many economic crises have occurred. In the United States, the Great Depression began soon after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors ("The Great Depression."). In turn, from this single tragic event, numerous amounts of chain reactions occurred.
The Great Depression was a period of first-time decline in economic activity. It occurred between the years 1929 and 1939. It was the worst and longest economic breakdown in history. The Wall Street stock market crash started the Great Depression. It had terrible effects on the country (United States of America).