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What Caused The Great Depression Essay

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the market was built upon loans from the banks. This picture represents how the stock brokers reacted when the stock market started to fail due to the over speculation of stocks. Stockbrokers. It was not only the over speculation of stocks but it also failed due to the marginal buying of stock thus, causing the stock market to crash. The effect that marginal buying had on the stock market was that people would use their credit to buy stocks instead of their own money. The money that was then put into the stock market started to show “growth” instead the stock was built on non-existent funds that were worth nothing. As people continued to buy stocks they started to go into debt. People felt as though the stock market was a quick way to get rich but really they were losing money and putting America into debt. “Stock prices continued to fall, and on July 8, 1932, the market hit its lowest point during the Depression.” (americaslibraries.org) It was due to the failure of the stock markets that people started to lose their jobs and go deeper into debt because they could not pay back the loans that they had borrowed from the banks. It is easy to see that the stock market was a major factor as to why the stock market crashed but, others believe that is was due …show more content…

The protective tariffs such as the Hawley- Smoot Tariff which set the highest tariff rates in American history in an attempt to boost the economy. Instead of the Hawley -Smoot tariff helping to stimulate the economy it hurt it because in response to the tariff other countries created retaliation tariffs. But, the Hawley-Smoot Tariff was not a reason as to why the United States went into a Great Depression. It did not help the Great Depression get better but, it did not start the Great Depression either. The Stock Market crash was caused by the failing of businesses and

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The problem was that many people that bought stock bought their shares on a type of credit in which they paid part of the amount required and planned on paying the rest after they sold their share. When the stock market crashed, shares were worth nothing and the investors could not afford to pay the remaining balance of the original purchase price. Moreover it was common for people to borrow money from banks to buy stock so it became a problem for the banks when the population could not pay back their

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881 Words | 4 Pages

Document E says, “Businesses needed to sell stock to raise money to expand. By the mid-1920s only 2 percent of Americans were purchasing stock. But as manufacturing continued to expand, stock prices climbed upward and investors made money.” This quote shows how businesses were relying on stocks to make money and once the market crashed, they lost all the money that they had in the market at the time. Since Businesses were relying on the market, a lot of them weren’t able to survive.

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Buying on credit, overproduction, and income inequality were just some of the leading factors to the great depression. It began when installment buying was introduced people didn’t view debts as shameful and bought things at a faster rate than they could pay. People were also investing a lot in the stock market one day it crashed. October 29, 1929 (now known as black tuesday) was the day the stock market crashed. It caused great panic in America since many peoples entire life savings were lost in one day.

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Leuchtenberg sad, “There was no single cause of the crash and ensuing depression,” [Doc2]. Many things as stated earlier contributed to the crash, such as overexpansion of credit, goods, industries and rising rates of unemployment. Many Americans saw the Stock Market as an easy way to create wealth by buying stocks cheap, usually at a margin, and selling for a higher price, hopeful to profit. Buying on margin was the act of paying some money on a stock, but loaning the rest from a bank who expected would be paid back when profit was made. Stocks became more expensive to the point where nobody wanted to buy them because of their extreme price.

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468 Words | 2 Pages

This being the cause of prices concerning stocks and shares to increase, to the point that it was nearly impossible to invest in the market. This being a factor in causing companies to terminate their employees swiftly, and if an individual remained employed, their wage decreased dramatically below the minimum wage. Many counterparts had invested in the stocks with loans or borrowed money, and when the market crashed, their share had been utterly wiped out, leaving them with absolutely no money. Individuals who had their money in banks, became skeptical of the banks and started to withdraw their money, to preserve their remaining savings. This, causing the banks to have to take out loans from bigger banks so that they could pay the individuals their money.

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174 Words | 1 Pages

The great depression in the US, which began in 1929, and ended in 1938 was caused by many different things all happening at the same time in the economy. The wall street crash in October 1929 was one of the main causes, when the stock markets crashed. This was caused by many things, but the main reason for it was a deflation (which is an event where the general level of prices in an economy are reduced) On October 24th (black Thursday), share prices dropped by 14 billion dollars in a day, and more than 30 billion in a week. This forced many of the banks to close, due to them investing their client’s savings in the stock market.

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The Stock market Crash was one of the causes of the Great Depression. One cause of the Stock Market Crash was the stock exchange. This led thousands of Americans to invest in stocks and lose money. Many Americans borrowed money from the bank to buy stocks. Most of the time, people who lost money were unable to pay the banks back their debt; which caused banks to fail.

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493 Words | 2 Pages

Even the people who didn’t owe money to the brokers ran to the bank because they saw how the stock market was crashing down drastically. When everyone started running to the bank for their money, the bank was left with nothing left. This caused people to lose everything they had, all their money! Also in this time period banks weren’t responsible for people’s money because they were not regulated by the government. This caused people to lose everything they had worked for and furthering the

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884 Words | 4 Pages

Due to many people using banks to lend them money in order for them to buy stocks they got into debt. Many investors were unable to pay their loans causing banks to fail. In a New York Times edition in October 29, 1929 (Document 3) it states, “ Stock Prices Slump $14,000,000,000 In NationWide Stampede To Unload Bankers To Support Market Today.” Many banks lent money to speculatory stock investors.

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1384 Words | 6 Pages

The stock market crash of 1929 is often viewed as what started the Great Depression. However, the crash was not the cause of the depression but one of several factors that contributed to it. One possible cause of the Great Depression was the rapid expansion of credit in the 1920s, which led to a boom in consumer spending and stock market speculation. This created a false sense of prosperity, which eventually led to the crash. Another possible cause of the Great Depression was the unequal distribution of wealth in the United States.

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Unrestrained speculation and margin buying were the two big things in the Stock Market. Speculators bought stocks with money they borrowed. They would used those stocks as collateral to buy more stock. So if that person could not repay the loan, they would forfeit their stocks. Margin buying was a way of attracting the less wealthy to buy stocks.

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The Great Depression was caused by speculation and installment buying, income maldistribution, and overproduction because each of these factors combined made the economy worse before and after the stock market crash, which led to The Great Depression. Speculation and installment buying helped caused The Great Depression because people were buying so much stuff on credit, when

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Have you ever read a story or watched a movie that has made you question the dangers of social inequality? In both Snowpiercer and The Ones Who Walk Away from Omelas are both pieces of fiction that follow the idea of social inequality as well as sacrifice. Both explore these ideas through the theme of sacrifice. Firstly, Snowpiercer and the Ones Who Walk Away from Omelas share a theme of sacrifice.

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There were a variety of causes that caused the Great Depression, but the main cause that started it was a decrease in spending. This led to production decrease because manufacturers and merchandisers did not want to have unused items just sitting on the shelves. In October of 1929 the stock market crashed. The United States stock prices had reached levels that could not be justified by sensible predictions of future earnings. The results of this were catastrophic.

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750 Words | 3 Pages

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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