ipl-logo

What Caused The Great Depression Essay

832 Words4 Pages

The Great Depression, one of America’s worst economic downturns in history, was directly fueled by the financial prosperity of the 1920s. Several major sources of this include overproduction, banking failure and panics, the stock market crash, consumer buying, speculation, and low wages. Each of these causes had signs that were blatantly ignored during the 1920s. Overproduction, the production of too many products and not enough people purchasing them, was a major part of the 1920s as stated previously. During the economic boom of the 20s, new technologies such as the washing machine, the stove, the radio, and the electric refrigerator were created. These products were seen as luxuries by American society, so they were produced at a high-speed rate. Still, at this time many rural households lacked electricity. This made these appliances available to urban and suburban homes, but once the appeal of them wore off, there were still thousands available across the US that rural homes had no use of. Some consumers didn’t even have the money to purchase these goods. Additionally, farmers struggled with the post-war surplus of crops along with cheap crop prices. They grew more than …show more content…

During the 20s, stocks rose dramatically in value and Americans bought them with the hopes of becoming rich quickly. This fueled the stock market. However, similarly to installment buying, people bought stocks on margin and promised to pay back the borrowed money at a later time when they were ready to sell the stock. This was a flawed system though, mainly because if a stock’s price dropped, Americans didn’t have the funds to cover their losses (https://www.yonkerspublicschools.org/cms/lib/NY01814060/Centricity/Domain/4975/The%20Causes%20of%20the%20Great%20Depression%20.pdf). The amount of stocks being purchased on margin should’ve been an indicator of a recession in the near

Show More
Related
468 Words | 2 Pages

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.

Read More
383 Words | 2 Pages

Speculation and installment buying involved the decisions Americans made that caused the economy to plummet. In 1929 stocks began to be worth more than the value of the company. Most people believed that investing in stocks was the flawless way to become rich and that anyone could do it.

Read More
884 Words | 4 Pages

The exciting and prosperous decade of the 1920s suddenly ended when the world faced a severe economic crisis known as the Great Depression. Most men were unaware of the upcoming crash of the economy and were left penniless. What led up to this catastrophe that not only affected our country but the world, globally? After the 1920’s many people began thinking they could get rich easily by buying stocks. This was the beginning of many unexpected problems such as stock market speculation, the failure of many banks, and the problem of overproduction and underconsumption.

Read More
793 Words | 4 Pages

The average income of the American family dropped 40 percent from 1929 to 1932. Income fell from $2,300 to $1,500 per year. People lost their jobs, struggled to provide for their families, and subsequently business failed. Just as people were optimistic about the overall state of America it took a turn for the worst. The great depression hit in the fall of 1929.

Read More
1228 Words | 5 Pages

During this time period, the stock market would not have been affordable for the average person and would be considered a luxury. Normal Americans would have to buy stocks on loan if they wanted to invest. Buying stocks on loan is a form of credit, as you would be taking money out of the banks with the understanding that you would need to pay it back later. The uneven distribution of wealth was another major

Read More
135 Words | 1 Pages

Before the Stock Market crash of 1929, America went through a decade of prosperity and social change known as the Roaring Twenties. New fads and numerous inventions emerged throughout our country. Many people bought on credit and as a result, our economy flourished. However, many Americans failed to realize this would be one of the underlying causes leading to the Great Depression. For instance, “Most people bought, but many couldn’t afford to pay the full price all at once.

Read More
625 Words | 3 Pages

The stock market had an important role in the booming 1920’s. Everyone was buying and selling stocks at a high rate for a few years. Then, on October 24th, 1929, the stock prices were dropping lower and lower forcing people to sell them quickly. In the article “Firing, Not Hiring”, the author states, “Stocks were selling a fraction of the price” (Hayes). Sooner or later people who did not sell their stocks before lost a large sum of money.

Read More
1468 Words | 6 Pages

Up until the crash, the stock market had been where the money was being made. Therefore, because they were a great source of income, countless people would borrow money to try to make a profit. “Few regulations were placed on banks and they lent money to those who speculated recklessly in stocks” ("The Great Depression"). Because so many people bought stocks on borrowed money, when the crash of the stock market came, they did not have the money to repay from whom they had borrowed. Many of these people were in it for the short run, and borrowing money was an easy way to get money to buy a stock.

Read More
1004 Words | 5 Pages

Investors poured money into equities, convinced that the market would climb endlessly, “...most of America waited for supply to create its own demand, waited for the business cycle to run its natural course, waited for the stock market to get back on its upward course”

Read More
1682 Words | 7 Pages

The stock market that had for long been viewed as a path to wealth and richness was now a sure path to bankruptcy. The stock market was not the only one that was affected; actually, that was just but the beginning of the Great Depression. In effect, it was unfavorable for the clients whose money was already in the markets for investment: many banks had done that and that meant a huge loss to the clients. It was also a double loss in that though the clients lost their money, the banks were forced to close down. This is because the banks at the time depended completely on the stock market.

Read More
653 Words | 3 Pages

This was because of numerous factors like increased wages and the introduction of new materialistic items into American culture. The growth of media and advertising also played a role in shaping American society and promoting mass consumerism. People were encouraged by the surrounding culture to purchase new products like automobiles, radios, and household appliances, which became symbols for social status and modernity. The consumer society had a sizable impact on American culture as the desire to possess

Read More
949 Words | 4 Pages

Even with the drastic wage increases for many workers in the 1920s, wealth was still heavily concentrated in the “pockets” of the nation’s elitists (ex. Industry leaders). These elitists invested absurd amounts of their money into the New York Stock Exchange. Sometimes, even more money than they actually had. They could do this by borrowing on margin (a type of loan), something which if done often, can make a market have a high volatility (more dramatic price swings, in short periods). With more and more stocks being purchased on margin, the market became even more unstable.

Read More
726 Words | 3 Pages

In 1929, the U.S. was hit with the worst economic crisis in the history of the country, the Great Depression. The Great Depression left millions of people unemployed and cost millions their life's savings. The Depression lasted for ten long years for the American people. Since the Great Depression ended, people have studied it, trying to figure out what happened that started it all. The problem was, in fact, the poor economic habits of the people at the time, such as speculation, income maldistribution, and overproduction.

Read More
780 Words | 4 Pages

Beginning in 1929 a worldwide economic downturn the Great Depression began. It was the longest depression ever experienced lasting until about 1939. The Depression started in the United States, however because of the drastic declines in productivity, unemployment, and deflation the Great Depression was felt in almost every country around the world. Only the Civil War ranks ahead of the Great Depression as the gravest crisis in the history of the United States of America.

Read More
750 Words | 3 Pages

Nishat kazi (Muniya) 11th grade The Great Depression was one of the worst downturn of economy in the history that took place during the 1930s. It had a catastrophic effect in countries on both rich and poor. Though there are a lot of causes behind the Great Depression,the main three causes were-1.Bank failure 2.Stock market crash 3.laissez faire.

Read More

More about What Caused The Great Depression Essay

Related Topics

Open Document