What Were Some Of The Precursors To The Great Depression

Hayleigh Smith Donnelly US History 3 March 2024 What caused the Great Depression? What were some of the precursors to this? The Great Depression, starting in 1929 and lasting through the 1930s, was a worldwide economic depression that had a major effect on people everywhere. People were dying of illness and starvation, they were losing their jobs, their homes, and even members of their family because of the financial hardships the Depression put them through. Although the Great Depression was one major event, there were several causes and precursors that led to the end result of this catastrophe. The most common affiliation with the Great Depression was the Stock Market Crash of 1929. Many banks in the United States had invested heavily in the stock market,

Farming and agriculture was a main source of lifestyle and income for a lot of families and individuals in the 1920s. However, agriculture faced many hardships and difficulties during this time. Farmers experienced falling commodity prices, overproduction and high waste levels, and high debt levels. The Dust Bowl in the Midwest, one of the biggest droughts in history, added to the difficulty. The lack of water caused widespread crop failures and economic hardships for many rural communities. There were also many errors in the Monetary Policy making process. Central banks, including the United States Federal Reserve, made a few mistakes in a few policies that caused just enough noise that it dramatically contributed to the economic downturn. This panic amongst the Federal Reserve caused the government to raise interest greatly in the early 1930s to defend the gold standard, or the system by which the value of currency was defined in terms of gold, for which the currency could be exchanged. This process reduced the money supply and exacerbated the deflationary pressures on the economy as a