The Causes of the Great Depression Adam Fenster Mr. Banker March 6, 2014 Modern World There were many contributions to the cause of the Great Depression, but the three most prominent catalysts were the crash of the New York Stock Exchange, the excessive spending by Americans in the 1920s as well as the bad shape the economy was in, and the false belief that the post-war economic boom would last. As we look back now from our future perspective, we can analyze exactly what went wrong, and how to prevent events like this from happening in the future. The New York Stock Exchange crash sent Americans into panic and made most people lose trust in stocks. Americans were spending too much and investments were put in too deep. As a result, America could no longer keep up the funding of war relief efforts in Europe. (Great Depression) Politicians and Citizens were furious at banks for tricking people who had invested by selling stocks at a higher price than was appropriate. Economic historians claim that the Great Depression and the Stock Market Crash that overtook the 1930s had many more causes than just dishonest bank tellers. One crucial catalyst was Americans buying on margin, or buying stocks with borrowed money in the hopes that the stocks will rise. (New York Stock Exchange) This investment was hoping that people could make a profit and repay the loans they made. But just as one would expect, events didn’t unfold as planned. When the stocks ended up crashing, people were completely out of money, and had nothing to give to repay the banks, which were also in need of money. The crashing of the stocks was a pivotal moment, and eventually led to the Great Depression In the 1920s Americans naively believed that the economy... ... middle of paper ... ...n, was one of the most traumatic events The United States has endured. With the deadly combination of faulty investments, false assumptions of prosperity, and naive economic decisions, America was plunged into a depression. Though tragic, this event was a needed learning experience for America and served as a model for other countries. Works Cited "Great Depression." World History: The Modern Era. ABC-CLIO, 2014. Web. 20 Feb. 2014 "The Great Depression (Overview)." World History: The Modern Era. ABC-CLIO, 2014. Web. 20 Feb. 2014. "New York Stock Exchange." World History: The Modern Era. ABC-CLIO, 2014. Web. 4 Mar. 2014.
The stock market crash of 1929 is one of the main causes of the Great Depression. Before the stock market crash many people bought on margin, which caused the stock market to become very unbalanced, which led to the crash. Many people had invested heavily in the stock market during the 1920’s. All of these people who invested in the stock market lost all the money they had, since they relied on the stock market so much. The stock market crash also played a more physiological role in causing the Great depression. More businesses became aware of the difficulties, which caused businesses to not expand and start new projects. This caused job insecurity and uncertainty in incomes for employees. The crash was also used as a symbol of the changing times. The crash lead the American peop...
Other factors that contributed to the Great Depression include individuals who traded stocks with little concern for the underlying value of that stock, the federal government did not create any policies to stop the over speculation, and the Federal government’s failure to create to curb the over-speculation which only made the situation worse. When the Federal government decided to stop speculation by implementing on anti-speculative policies such as raising interest rates this created a panic because stockbrokers and individuals started to worry about their investments.
There were many causes for the Great Depression. The first and one of the largest was the stock market crash. Before 1929 the stock market was flourishing and everyone wanted to buy stocks. People were so confident in the stock market that they were buying “on margin”, which meant that brokers would lend them 10% of the money they invested (D1). The problems began when stocks were being over speculated. When people began to realize this, they began selling there shares. On October 29, 1929, 16 million shares were sold (D9). This day became known as “Black Thursday”, the day the stock market crashed (D12). The second reason was the overproduction of goods. Factories had already produced too many goods and now there was no demand for them. The government began to raise tariffs to protect Canadian industries but things only led downhill from there.
The Great Depression America 1929-1941 by Robert S. McElvaine covers many topics of American history during the "Great Depression" through 1941. The topic that I have selected to compare to the text of American, Past and Present, written by Robert A. Divine, T.H. Breen, George M. Frederickson and R. Hal Williams, is Herbert Hoover, the thirty-first president of the United States and America's president during the horrible "Great Depression".
There is no doubt that the stock market crash contributed to the great depression, but how? One way that the Crash contributed to the depression was the loss of money it caused to the average man. It is believed that in the first day of the crash almost a billion dollars were lost, this took a large amount out of the pocket of the common man. Without this money people were unable to purchase consumer goods, which the United States economy was based on. Another way the Crash contributed to the depression was the loss of confidence in the market. When t...
The Great Depression was in no way the only depression the country has ever seen, but it was one of the worst economic downfalls in the United States. As for North America and the United States, the Great Depression was the worst it had ever seen. In addition to North America, the Depression greatly affected Europe and other various countries throughout the world significantly during the 1920’s and 1930’s. The Great Depression was caused by the collapse of the Stock Market, which happened in October of 1929. The crash exhausted about forty percent of the paper values of common stocks. It was the worst depression due to the fact that at the time of the Great Depression the government involvement in the economy was higher than it had ever been. A unique government agency had been set up exclusively to prevent depressions and their related troubles for instance bank panics. All of ...
There were many events that led to the Great Depression. Every event affected the people worse and worse over time. The Great Depression started in the early 1930’s during Hoover’s presidency. However, before the Great Depression life was great, there were many new technologies that made life more advanced. Nobody expected such a horrible event to occur during the time of the “Roaring 20’S.”
In the 1920s, it seemed as if the stock market was the safest and easiest way of gaining money. When people heard of this, they started to purchase stocks as well, but by stock speculation. Stock speculation was the purchasing of stocks without any knowledge of the company’s financial situation, meaning people just assumed that every stock would give them a profit. To make matters worse, banks began loaning out money to investors, in order for them to purchase stocks. Soon enough, in early 1929, banks were receiving many warnings about loaning too much money. However, this did not pose a real threat to banks or investors, for they thought that the stock market was just going to keep on going up. Unfortunately, this was not the
October 29th, 1929 marked the beginning of the Great Depression, a depression that forever changed the United States of America. The Stock Market collapse was unavoidable considering the lavish life style of the 1920’s. Some of the ominous signs leading up to the crash was that there was a high unemployment rate, automobile sales were down, and many farms were failing. Consumerism played a key role in the Stock Market Crash of 1929 because Americans speculated on the stocks hoping they would grow in their favor. They would invest in these stocks at a low rate which gave them a false sense of wealth causing them to invest in even more stocks at the same low rate. When they purchased these stocks at this low rate they never made enough money to pay it all back, therefore contributing to the crash of 1929. Also contributing to the crash was the over production of consumer goods. When companies began to mass produce goods they did not not need as many workers so they fired them. Even though there was an abundance of goods mass produced and at a cheap price because of that, so many people now had no jobs so the goods were not being purchased. Even though, from 1920 to 1929, consumerism and overproduction partially caused the Great Depression, the unequal distribution of wealth and income was the most significant catalyst.
Such an event caused many problems in the country. The first problem had been that many people became unemployed due to the stock market crash. Many industries had too many products left over that was not being sold in the country in which lead to job layoffs since they didn’t have money to pay their workers. In the early days of the depression many employers including the government tried to give jobs to whoever was the head of the households. (Doc 5) Unemployment helped lead to another problem which was hunger. In document 2 families who were hungry had to live off of dandelions and blackberries. Also they had to stand on lines for cheap food. The American people desperation to have a decent meal that would satisfy their needs eventually led to them fishing food out o...
There have been many issues that caused the stock market to crash. One major effect on the Great Depression was the current state of agriculture. The effect from both the Dust Bowl drought and the Great Depression made it hard on farmers in the early 1900’s; it was hard for farmers to produce crops (“The Ultimate AP US History”). Farmers with small businesses were forced to end their profession because of the new economic climate. As the farmers left the business of agriculture, there was less crop to sell the country (Pettinger). With the drop in prices after the war, it was difficult for farmers to stay current with loan payments (Romer and Pells).
The Great Depression often seems very distant to people of the 21st century. This article is a good reminder of potential problems that may reoccur. The article showed in a very literal way the idea that a depression can bring a growing country to its knees. The overall ramifications of the event were never discussed in detail, but the historical significance is that people's lives were put on hold while they tried to struggle through an extremely difficult time.
The stock market crash of 1929 was the primary event that led to the collapse of stability in the nation and ultimately paved the road to the Great Depression. The crash was a wide range of causes that varied throughout the prosperous times of the 1920’s. There were consumers buying on margin, too much faith in businesses and government, and most felt there were large expansions in the stock market. Because of all these positive views that the people of the American society possessed, people hardly looked at the crises in front of them.... ...
By 1929, the U.S. economy was in serious trouble despite the soaring profits in the stock market. Since the end of WWI in 1918, farm prices had dropped about 40% below their pre-war level. Farm profits fell so low that many farmers could not pay their debts to the banks; in turn this caused about 550 banks to go out of business. The nations illusion of unending prosperity was shattered on Oct. 24 1929. Worried investors who had bought stock on credit began to sell it. A panic developed, and on October 29, stockholders sold a record 16,410,030 share. By mid-November, stock prices had plunged about 40%. The stock market crash led to the Great Depression, the worst depression in the nation’s history (until…2014 ☺). It was a terrible price to pay for the false sense of prosperity and national well being of the Roaring Twenties.
"Great Depression in the United States." Microsoft Encarta Encyclopedia 2001. CD-ROM. 2001 ed. Microsoft Corporation. 2001