Causes Of The Great Depression

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. As a result industrial production fell by more than 9% between the market crashes in October and December 1929 (McElvaine 48.) Bibliography: McElvaine, Robert S. The Great Depression. New York: Times, 1984.

On the following Tuesday the stock market fell and the market was not able to get back up. This day is forever known as “Black Tuesday,” and the official start of the Great Depression. The speculation and the resulting stock market crash acted as the trigger for the already unstable United States economy. Due to the maldistribution of wealth and the unstable economy of the 1920’s, the nation headed into a decade of trouble. In response to its economic difficulties, the United States set up even higher trade barriers with other nations, causing more trouble within the nation.

Stock Market Crash causes The Great Depression The stock market crash, one of the most miserable times in the history of the United States stock market. Well, the stock market had many investors who lost most of their money either by the banks or the stock market. The stock market crash caused the Great Depression by making investors and companies lose majority of their money. The Great Depression was the worst unprofitable 10 years in history. This worst time period lasted from 1929 to 1939 and it began after the stock market crashed in 1929.

“These skyrocketing stock prices signaled trouble for the U.S. economy” (Causes of the Great Depression. This caused businesses and factories to fire workers because they lost money when the stock market crash and now since the economy is in fear people did not want to spend their money. In poor areas, schools were being shut down, which left about 300,000 children with no education. If children didn’t get any education then there would be even little hope for them to get a job to keep them financially stable. There was absolute chaos when people heard that the stock market had crashed, which led to bank runs.

The Great Depression was a period of first-time decline in economic movement. It occurred between the years 1929 and 1939. It was the worst and longest economic breakdown in history. The Wall Street stock market crash started the Great Depression; it had terrible effects on the country (United States of America). When the stock market started failing many factories closed production of all types of good.

This maldistribution of income between the rich and the middle class grew throughout the 1920's. While the disposable income per capita rose 9% from 1920 to 1929, those with income within the top 1% enjoyed a stupendous 75% increase in per capita disposable income(end note 7). A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period.

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.

Once Recession ended the GNP went up 7.9 percent in 1939. (Www.english.uiuc.edu) tells us that besides ruining many thousands of individual investors, this precipitous decline in the value of assets greatly strained banks and other financial institutions, particularly those holding stocks in their portfolios. Many banks were consequently forced into insolvency; by 1933, 11,000 of the United States' 25,000 banks had failed. The failure of so many banks, combined with a general and nationwide loss of confidence in the economy, led to much-reduced levels of spending and demand and hence of production, thus aggravating the downward spiral. “The result was drastically falling output and drastically rising unemployment; ... ... middle of paper ... ...its were contracting it; The Fed's inaction was the reason why the initial recession turned into a prolonged depression; The economy continually sank throughout Hoover's entire term.

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.

The Great Depression was an economic problem in North America, Europe, and other industrialized countries around the world that began in 1929 and lasted until 1939. It was the longest and most stressing depression ever. The U.S. economy had gone into a depression six months earlier, but the Great Depression had begun with a breakdown of stock-market prices on the New York Stock Exchange in October 1929. The next three years stock prices in the United States had continued to drop, until 1932 it had dropped to about 20% of its value. Other than messing up thousands of individual investors, the decline in the value of good banks and other financial facilities went bad.