What Caused The Great Depression Essay

There were a few main events that caused the Great Depression: the stock market crash, a drought, and issues with the government and banks. The stock market crash of 1929 was essentially what initiated the depression. Unemployment rates were through the roof and banks epicly failed. People in the United States were left not only jobless, but homeless or struggling to sustain a viable living situation. The crash was a result of the absurd spending that occurred during the “Roaring 20s.” Times were changing in America and so were the way things were being mass produced and easily accessible to the general public. New things people didn’t have before were now on the market like radios and different machinery for the home that made cleaning easier

Of course, the usage of credit would still have to later be paid, but it made it much easier for Americans to quickly purchase market items and not worry about having all the money at that exact moment. Though credit is a great tool that we still utilize today, this is one of the leading causes in the failure of banks during this time period. However, the spending of the public began to decrease towards the end of the 1920s which left businesses with a surplus of goods that no longer matched the demand that they had anticipated to continue and overproduced for. Despite this, the stock market prices continued to increase and hit an all time high, but those prices started to drop only two days after reaching its peak. People often refer to “Black Tuesday” as the day when people began noticing the issues with the stock market and panicked, trying to quickly sell their stocks. As a result, the market crashed and all stocks were worthless which left many investors with nothing. Since no one was buying any goods, factories had to lay off the majority of their employees, leaving many Americans jobless as mentioned

The mass panic across the country led people to flee to the banks to withdraw their money before the banks closed. However, a large number of the banks have used said money others stored for speculation buying and were unable to pay back investors. This means they did not have the money to even return to those who used the banks and others could not retrieve their money since many banks closed before people could get to them. The Federal Reserve System was no help in the bank failures as they installed policies that contributed to the issues at hand. For starters, they increased interest rates in response to the speculation buying, but this caused people to just stop spending their money. The Reserve also did nothing to assist in preventing the mass panic and closure of the banks. These actions caused the people to lose any trust they had in the American banking system which further fueled the mass withdrawals from banks. Another kick in the side to Americans was the dust bowl, which further ignited the Great Depression. Not only did factories face mass production, but farmers did too which was problematic with the crash that left people with a large amount of overproduction. The overproduction of crops on the farmland did have a large negative impact on the land itself and its viability. As a result, there was a massive drought across the plains which destroyed any surrounding farmland and even