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Causes Of The Great Depression Essay

1872 Words8 Pages

The causes of the Great Depression were overproduction, the Stock Market Crash, the Dust Bowl, and decreased international lending and tariffs. During the late 1920s, referred to as the “Roaring 20s” industries produced an oversupply of products that exceeded consumer demand. The price of products dropped dramatically and industries’ sales plummeted. After the Stock Market Crash of 1929, consumers stopped buying stocks and without the support of investors, industries had to fire more and more people until they were forced to close or downsize. Banks began to fail because many citizens lost their jobs and were unable to pay back their debt from loans. Poor farming practices and drought caused the huge dust storm in the Great Plains known as …show more content…

Industries like agriculture, automobiles, and stocks were overproduced and consumer demand could not keep up. Poor distribution of profit by business owners wanting to expand instead of increasing wages caused a surge in unemployment among working-class citizens. As the surplus of goods was skyrocketing, prices began to decrease immensely and the industries manufacturing the goods were losing profit. Due to the speculation of an economic depression forming, the stock exchange was rapidly increasing and reaching all-time highs. People were buying stocks with money they did not have by using credit from brokers as prices began to decrease. On October 29, 1929, the Stock Market Crash occurred and lost 89% in value. The people who used credit to buy their stocks were unable to repay their loans and tens of thousands of banks failed. In 1930, huge clouds of dust destroyed the crops of farmers in the Great Plains because of long-term drought and poor farming practices. Farmers in search of new land migrated West and struggled to find cultivable land that was not already owned by large corporations. The Smoot-Hawley Tariff Act of 1930 increased the taxes on exported goods. Major U.S. trading partners created retaliatory tariffs on American goods in response and protested against the tax increases. The Act dramatically decreased the amount of exported goods and contributed to the decline in agriculture and other

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