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Cause Of The Great Depression Essay

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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.
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