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What Caused The Great Depression Essay

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The Great Depression of the 1930’s marked a period of the worst economic decline in the world. While there are many possible causes of the Great Depression, it is unlikely that only one shock solely put the nation in such a recession. The combination of factors during that short time period exponentiated their negative effects, ultimately sparking the largest depression the United States has ever experienced. The purpose of this paper is to dissect and analyze some of the possible causes of the nations economic decline in detail. One of the causes examined in this paper is the stock market crash of 1929, which is commonly coined as the catalyst for the Great Depression. In conjunction with the stock market crash, bank failures contributed to …show more content…

Further, according to the Library of Economics and Liberty, “In the era before World War II, prices also typically fell during a recession (i.e., inflation was negative)” (Romer). This is especially the case for the Great Depression as prices play an important role for many of the causes. Recessions can be initiated by many different factors. For example, a sizeable cut in government spending or a period of negativity among firms and consumers may cause the output of goods and services to …show more content…

In addition, while the United States was expanding in previous years, it eventually was expanding at a diminishing rate as it approached its climax. While the numbers kept increasing, they increased by less and less, which disguised the actual production from the public (Suddath). These effects caused stocks to have a listed price much larger than their real value, ultimately driving their price down (History.com). The lower the prices went, the more people caught on, and the faster prices dropped. A panic across citizens also ensued and fear set in as prices continued to fall; no one really knew what was

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When the stock market crashed many were unable to pay their debts not only to their stock purchases but also to their banks. Without payments to the loans given out, banks began to fail. Additionally, the gap between upper and lower classes greatly widened, which only increased the economic issues. On top of everything occurring, a drought developed in the Great Plains that created the “Dust Bowl” and destroyed the agriculture business. The sources of downfall in the Great Depression can be traced to the stock market failure, bank failure, farm failure, and job market failure.

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Joshua Youngworth Mr. Wall Period 4A 1-13-23 Stock Market Crash and the Great Depression Prior to the Great Depression stocks started to be purchased much more commonly as people assumed they could only gain profit from them. After the stock market crashed in 1929, the Great Depression soon began and the United States fell into a state of financial struggles. The Great Depression was a time where these struggles were common for tons of people all over the country and unemployment rates skyrocketed. The stock market crash caused the Great Depression because families couldn’t pay for anything, businesses started to fail, and banks closed.

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There were far too many independent banks during the period of the Great Depression, and the problem with the surplus of independent banks was the lack of support they could provide each other. The Run on the Banks resulted in the fall of banks, and an overall lack of confidence in the banking system. The overuse of credit in the economy helped trigger the run on the banks by people taking out loans from banks and then not being able to afford the continual payments, leading them to withdraw their money and shut down the banks. The Stock Market Crash was also a major factor in the start of the Great Depression. People who were buying into the stock market were gambling their money into the stock market in the hopes of making a quick profit (B).

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And to cover up the expense the banks have to get the money from the interests they get on loans. The banks also gave loans to the stock market brokers and as the stock markets failed the bank couldn’t get the moneys back as a result they failed. And this bank failure along the stock market crash caused a great harm to the Us economy. During the mid 1920s the stock market went through

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