White House, n.d. Web. 16 Mar. 2014. . "The Federal Housing Administration."
The causes of the Great Depression in the early 20th century is a matter of active debate between economists. Although the popular belief is that the main cause was the crashing Stock Market in 1929 caused the Great Depression, There were other major economic events that contributed just as much as the crash, such as American’s overextension of credit, an unequal distribution of wealth, over production of goods, and a severe drop in business revenue. As these events transpired the state of economic crisis in the US began to skyrocket. The crashing stock market became a key contributor to this crisis. With World War I coming to a close, a new generation formed in the United States.
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.
Working class individual were buying stocks but because no regulations was in place to over see production and control the disparities of wealth gap between the working class citizens and the well to do exploded (Bali 225). This set the tone for the overproduction in industry that led to the bubble because many workers could not afford to buy the industrial output. Also, during the 1920’s, credit was introduced and the stock market was booming. What caused the worst depression in history? What events led up to the economic failure?
In October 1929, the United States stock market crashed due to panic selling. This crash started a rippling effect that contributed to a world wide economic crisis called the Great Depression. This crash was such a shock because of the economic expansion of the 1920’s when the Dow Jones average reached an all time high of three hundred eighty one. The year 1928 was a time of optimism and the stock market had become a place where everyday people truly believed that they could become rich. People everywhere were talking about the market and newspapers were reporting stories of ordinary people such as chauffeurs, maids, and teachers making millions off the stock market.
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.
The truth behind the stock market crash is that it was the event that caused the already unstable economy to go over the limit. If the president and the stock market crash did not cause the Great Depression, then what did? According to research done on the Great Depression, the causes rest on of different factors, but can be put under two main categories. The responsibility for the Great Depression falls not only on the Stock Market Crash, but also on the maldistribution of wealth, an unstable economy and the wild stock market practices of the 1920’s. The largest reason for the growing gap between the rich and the working-class people was the sudden increase in manufacturing during the 1920’s.