Essay On The Causes Of The Great Depression

There were innumerable causes linked to the happenings of the Great Depression. One of the largest, and the one I will be focusing on today, was the stock market crash that happened in the fall of 1929. Before this year the stock market was flourishing, had been for 10 years and was rewarding for all. Everyone, both rich and poor, wanted to, and were, buying stocks. This could act as a whole new cause in and of itself as, they were all so confident in the current state of the stock market that they were purchasing stocks “on margin” meaning that brokers and banks that they borrowed money from would lend them 10% of the money they invested. Doing so is inherently risky and is generally frowned upon if one is to maintain steady returns on investments.

This quickly lead to the major monetary losses for the majority of people (whether investors or not), lack of support for previously flourishing companies and banks and brokers without any hope for repayment on most of their given loans. Still the overarching issue primarily mentioned, that that occurred on October 29, 1929, is still undoubtedly the largest most driving force of the imminent depression. On that day alone, 16 million shares from various companies were sold because of this, it eventually became known as “Black Tuesday”, the day the stock market was decimated into a remnant of its past appeal. These events thinned out wealth at the time and lead to future skepticism of the stock market and its unpredictability for the layman. The culprit behind urgent selling of such a seismic amount of shares is not very difficult to identify. After a moderate dip in the finally accurate (no longer over speculated) value of the shares many people owned, panic the aforementioned culprit)