What Caused The Great Depression Research Paper

A famous American writer and professor, Isaac Asimov, once stated, “No one can possibly have lived through the Great Depression without being scarred by it. No amount of experience since the depression can convince someone who has lived through it that the world is safe economically.” The Great Depression was the worst economic downturn and disaster to occur in the United States and possibly the entire world, and lasted from 1929 to 1939. The Great Depression was caused by several long-term and short-term social, political, and economic causes, along with the Stock Market Crash in October of 1929. Problems with the people and society of the time period, also known as long-term social problems, were one of the significant causes of the Great

One of the major economic causes of the Great Depression was a long-term unequal distribution of wealth. John Galbraith, a present-day economist, explains the problem of this maldistribution in his article, “What Caused the Depression?” by saying, “This highly unequal distribution of income meant that the economy was dependent on a high level of investment or a high level of luxury consumer spending or both.” Simply put, workers didn’t experience the increase in wages and profit that management did, which resulted in a growing gap between the rich and the poor, and an economic reliance on the rich. As Galbraith states, the economy was dependent on investment and spending, and when the rich were pessimistic due to a bear market or weren't spending their money, the economy was severely damaged and weakened. On the flip side of that, some people were investing too much and over speculating in the stock market, which was a short-term economic cause of the Great Depression. People speculated, or gambled, in the stock market to make a quick profit. Basically, investors would buy stock they thought would rise and later sell for a profit. The problem was, however, was speculating was only good in theory, and if the stock price didn’t rise, investors could lose a lot of money and find themselves in a lot of debt. Both of these things weakened the US economy, which in return weakened the world economy. Also, during and after World War I, the US was a creditor nation. It established high tariffs that restricted imports and created a surplus of exports. As a result, war debts and reparations weren’t and couldn’t be paid, and the strength of the world economy severely declined. A weak world economy was another short-term economic cause of the Great Depression. Many economic aspects came together to create long-term and short-term causes of the Great