What Caused The Great Depression Essay

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

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

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