Main Causes Of The Great Depression

1074 Words 5 Pages
The Great Depression was an extreme time of struggle for not only the economy of America, but also the American people of every race. The Great Depression took place from 1929- 1939. One of the main reasons of what led to the Great Depression was the crash of the stock market. The crash itself propelled and drove Wall Street workers straight into a major fear and nightmare that was thought and imagined to never come. Throughout the years that came “Consumer spending and investment dropped, causing steep declines in industrial output and rising levels of unemployment as failing companies laid off workers”. As years went on there was a mass incensement of unemployment and is documented to be on of the worst times of American employment. And although we are well aware of the crash of the stock market to be one of the main causes there were also many other reasons to the contribution of the depression such as lack of diversification in the American economy, maldistribution of purchasing power, and the credit structure of the economy. And it was throughout all this and the years to come that would eventually lead the U.S out of the depression and into a great progressive nation. …show more content…
The American economy began to see a drop in consumer spending as well as stock prices continually rising. Because of this there was a lack of sell towards specific goods and production began to slow, specifically in automotive industries and big factory companies. As months went on we come across the date October 24, 1929 or what is best known as Black Thursday. Black Thursday was “When panicked sellers traded nearly 13 million shares on the New York stock exchange and investors suffered 5 billon dollars in losses”. Due to this major event in history many investors were totally washed and out, and left with absolutely nothing. Many small businesses and factories where forced to shut down due to production slowing down and were left with no other option, but to fire their workers. Unfortunately life for the employed would not be so different from those who were not. Wages began to drop at an increasing rate and because of this people were no longer able to purchase certain goods, and luxuries especially those who were used to living lavish life …show more content…
A majority of American families were barley surviving. They were either living on the edge, or below what at that time was considered poor. Families couldn’t buy houses, car or other luxuries, and sometimes even too poor to purchase simple necessities such as food. However because companies were continuing to create cars and keep people employed there began to create a gap as to who would be purchasing these items. Because of this factories began produce more goods than what people could purchase. This is what created the maldistribution of purchasing power during the great depression. The credit structure of the economy was also a problem that effected America’s economy. Small banks were struggling to survive as well as some of the larger banks. They were failing to “maintain adequate reserves and were investing recklessly in the stock market or making unwise loans.” Because of this banks were not prepared for the recession that was to come within the

Related Documents