Causes of the Great Depression

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Recommended: Chapter 12 causes of the great depression

The United States has experienced recessions about every twenty years (give or take) since the beginning of the Industrial Revolution. Nothing that had happened before was quite this serious, chaotic, or as long lasting as the Great Depression.

The crash was felt far beyond those on the trading floors. Speculators who borrowed money from the banks to buy their stocks could not repay the loans because they could not sell stocks, because no one else would buy them. This caused many banks to fail, and shut their doors. Since bank deposits were not insured before the 1930s, depositors’ lost their money, which in most cases was all the money that people had. The stock market crash had only deepened the course of the Great Depression in many ways. Not only wiping out the savings of thousands. It hurt a lot of commercial banks that had invested in corporate stocks. It also caused a loss of confidence in the market, which in turn prolonged the depression.

President Herbert Hoover blamed the severity of the depression on the international economic situation. The post-war international economy only functioned as long as the American banks exported enough capital to give European countries the chance to repay their debts and continue to buy American goods. As the U.S. companies began to cut back their production, they began to also cut back their purchases of raw materials and supplies from over seas. As a result, many European economies collapsed. American financers sharply dropped their foreign investments, and consumers began to buy less foreign goods. Paying off debts became much more difficult for everyone as a whole. As European conditions continued to spiral downward, demand for American exports fell also. Finally, when the Hawley-S...

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...d economic chaos, it alone was not responsible for the Great Depression. The depression throughout the nation (and the world) was a result of a combination of factors that matured during the 1920s.

Works Cited

"Causes Of The Great Depression | Great Depression Causes | The Great Depression." Causes Of The Great Depression | The Great Depression | Causes, Effects, Timelines. Web. 29 Mar. 2011. .

"The Great Depression - Causes of the Depression." Southern Illinois University Museum | Home. Web. 29 Mar. 2011. .

Kelly, Martin. "Great Depression - Top Five Causes of the Great Depression." American History From About. Web. 29 Mar. 2011. .

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