Essay On What Caused The Great Depression

Ava Romina Colombo-Walzer

Ms Melissa Rosen

AP United States History

February 17, 2023

What Caused the Great Depression?

The "Land of Opportunity", as the United States was known, soon became the land of economic failure. During the "Roaring 20's", the United States and its people were known for excess: bountiful parties and unemployment rates at all time lows. However, a fundamental change occurred in October of 1929--- the crash of the stock market which marked a rudimentary change in how the society of that era functioned. The Great Depression changed the festivities and abundance of the 1920’s into a time of extreme poverty and chronic issues. The causes of the Great Depression were varied. Although many people solely blame the economic

The “money making”, risky behavior of speculation in the stock market was often done by buying stocks on margin, or credit (Carman and Syrett, A History of the American People). The significance of this is that people were purchasing stock of companies that they had no knowledge of or confidence in, even getting to the point where companies had remarkable investments with very little actual entrepreneurial success. Furthermore, much of this buying and selling of stock was not even done with their own money since buying on margin was invented and soon became commonplace; therefore, most of the United States was in debt, where even buildings were running on debt rather than hard cash. Therefore, due to the blind faith in the stock market and its ability to inherently “make money”, the American masses and economy was susceptible to an economic crash at the slightest bump in the

As described in Leuchtenburg’s The Perils of Prosperity, purchasing items and paying for services in installments increased due to the normalization of having debt. Most goods at the time were purchased on credit, with 75% of radios and 60% of cars being paid for in installments (Leuchtenburg, The Perils of Prosperity). This installment buying meant that overtime, as more and more goods were purchased, people would have less money to spend during each payment period; thus, making the economy more prone to ups and downs. The superficial opulence among even the lower classes meant that when the economy eventually slowed down, they could not afford to pay all of these installments, which thereby exacerbated the financial trouble of the industries leading to even more widespread unemployment. This interfered with the “trickle-down” economic policies and attitudes of the time. What trickle-down economics means is that money would enter into the hands of the working class through the wealthiest few. When a large portion of the United States became unemployed (Historical Statistics of the United States, Part 1, U.S. Census Bureau,1975), trickle-down economic principles were hindered. Furthermore, this lack of accessible money to the majority of the US meant that instead of wealth trickling down, poverty made