The Two Primary Causes Of The Great Depression

On October 29, 1929, the long and severe economic recession began and became what is known as the Great Depression. The Great Depression had begun as a nationwide problem but soon became a worldwide issue. In 1929, the stock market crashed and sent America into an economic slump. Banks failed nationwide and unemployment rose as high as 25%. There are two primary reasons for the Great Depression: speculation and buying on margin. The Great Depression brought a lot of hardships to the families all across America. Meanwhile, President Roosevelt is doing all he can to help the recession by engaging his plan for the New Deal. The time of the Great Depression was given its name for very obvious reasons. America was genuinely worried for their future.

The crash of the stock market only made matters worse for the economy and sent America into its worst and longest lasting recession. Speculation was part of the reason for the economy’s downfall. “Over a million ordinary people...lost their life savings in stocks but lost their livelihoods in the speculation frenzy” (Gerdes). Speculation was used by many people to pay for their investments in the stock market. This was a terrible idea. Because so many people purchased on borrowed money debt grew immensely in America and people didn’t have the money to pay it off. Buying on margin became an issue as well, during this time. “In the 1920s, the buyer only had to put down 10 to 20 percent of his own money and thus borrowed 80 to 90 percent of the cost in stock”(The Stock Market Crash of 1929). Because so many people purchased stock on borrowed money, after the economy tanked, a majority of the people were in grave debt to the banks. Speculation and buying on margin were the source of the nationwide problem, the Great