From 1929 to 1941 the United States suffered its worst economic crisis. At the height of the Great Depression over 25% of the population was out of work and many others were struggling to simply survive. It was “hard times”, indeed. Still, many economists argue about what caused the Great Depression.
The three main causes of the great depression are the stock market crash, the banking crisis, and overproduction. The first cause of the Great Depression was the Stock Market Crash because it affected a lot of businesses in America and that resulted in unemployment. In the document “Everybody Ought to be Rich” it states “If he invests in good common stocks and allows the dividends… to accumulate, will at the end of twenty years have at least
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In the document “Banking”, it says “The weakness was…in the large number of independent (banks). When one bank failed, the assets of others were frozen while depositors elsewhere had a…warning to go and ask for their money. Thus one failure led to other failures, and these spread with a domino effect…. When income, employment, and values fell as the result of a depression bank failures could quickly become epidemic.” In the document “Margin”, it states that “Prices would be further depressed, and more margin buyers would be compelled to dump more stocks on the market. The circle would then be complete, for there was no apparent way of checking this downward spiral after it had been set in motion.” The first source said that when one bank goes down, it leads other banks to do the same thing. A lot of banks lent money to stock market speculation and went out of business overnight because of the stock market crash. As the banks fell, so did all of the money that was deposited. The second source says that when people were ‘compelled’ to sell more stocks on the market, you couldn’t check if the market was going down, and a lot of people who were selling stocks lost