There were many causes for the Depression; unequal distribution of money during the 1920’s was the main cause of the Depression. This unequal distribution happened on many different classes of people. The imbalance of money is what created such an unstable economy. The stock market was doing much worse than people thought during this period. This lead to the biggest stock market crash in our history.
What events led up to the economic failure? Was the government aware that the crash was coming? Traditionally, President Roosevelt has been lauded as a savior of the economy and one of the greatest presidents the United States has ever had. However, there is another way to look at the causes of the Great Depression. Average working individuals went into debt stocks had no defined value, but was based upon demand.
In 1929 the stock market crashed, triggering the worst depression ever in U.S. history, which lasted for about a decade. During the 1920s, the unequal distribution of wealth and the stock market speculation combined to create an unstable economy by the end of the decade. The unequal distribution of the wealth had several outlets. Money was distributed between industry and agriculture within the U.S.; in social classes, between the rich and middle class; and lastly in world markets, between America and Europe. Due to the imbalance of the wealth, the economy became very unstable.
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.
This speculation and the resulting stock market crashes acted as a trigger to the already unstable U.S. economy. Due to the misdistribution of wealth, the economy of the 1920's was one very much dependent upon confidence. The market crashes undermined this confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of loosing their jobs, and not being able to pay the interest.
People began to fear that the boom was going to end, the stock market crashed, the economy collapsed and the United States entered a long depression. The Great Depression of the thirties remains the most important economic event in American history. It caused enormous hardship for tens of millions of people and the failure of a large fraction of the nation’s banks, businesses, and farms. The stock market crash in October 1929 is believed to be the immediate cause of the Great Depression, but there were many other factors and long-term causes that developed in the years prior to the depression. The 1920’s may have been prosperous for some Americans, but the growing prosperity was actually weakening the economy.
What events led up to the economic failure? Was the government aware that the crash was coming? Traditionally, President Roosevelt has been lauded as a savior of the economy and one of the greatest presidents the United States have had. However, there is another way to look at the causes of the Great Depression. The stock themselves have no fixed value as in a action block if the stock is in demand the price goes up, no demand the price goes down.
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.
Stock Market Crashes, Bank Failures and a lot more, left the governments ineffective and this lead the global economy to what we call today- ‘’Great Depression’’.(Rockoff). As for the cause and what lead to Great Depression, the issue is still in debate among eminent economists, but the crux provides evidence that the worst ever depression ever expereinced by Global Economy stemed from multiple causes which are as follows: Stock Market Crash: Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA.
However, what can’t be argued is how the crash sparked a panic as companies, peoples, and the nation sank into the great depression. The Stock Market crash of 1929 was a terrible event in American history, creating chaos and panic. The crash was caused by an overproduction and underconsumption of goods, and use of credit in the market. People would use credit to buy stocks, and could not afford to repay their loans. This created a failure among banks, overall affecting the nation as a whole.