In the 1930s more than 15 million American had no jobs. That is more than 20 percent of the U.S population at that time. The United States was in a bad situation called The Great Depression. There was a lot of poverty since the stock market crashed in 1929. Americans lost their money/savings. Many lost their jobs. Businesses were shutting down, Farmers were not able to grow their produce. Although there were several factors that came together to cause the Great Depression, the three main causes were buying on credit, stock market crash, and overproduction.
Buying on credit helped cause the Great Depression because many Americans would buy goods that they cannot afford off installment buying. Installment buying is when you purchase a item with payments. 3 out of every 4 radio were purchased on the installment plan(doc 6) . Also 60% of all automobiles and furniture were purchased on installment plans(doc 6). This meant Americans would buy goods on installment at a rate faster than their income. Everything is good until the economy is hit by this. The economy is hit when People buy everything they need and then they stop buying, then
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Everybody wanted to be part of it. Not till October 1929 when the stock market crashed. As more people invested in the stock market they hope to make a quick profit on a speculative rise in stocks (doc 5). According to doc 5 “stock prices were forced up by competitive bidding rather than by any fundamental improvement in business”. This meant people would invest in a company and when the company rises they would sell for profit. When everybody would do this it caused a stock market crash. It’s normal for the stock market to go down. It has a business cycle where expansion is when the market is rising till it gets at its peak. Once it gets to it peaks the cycle drops which is called contraction till it gets to trough when the markets it’s at the lowest point; then again the market goes through