Main Causes Of The Great Depression

Good Essays
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

  • Decent Essays

    The companies they worked for couldn’t afford to pay for them to keep working there so many companies had to lay off a lot of people. Thousands of workers lost their jobs due to a loss in production. There were even low steel productions during the time which was one of the top producers of the United States and many workers were laid off from that job. For the people that were laid off it took Christians and dogooders for the poor and the ones who lost their jobs to keep from starving to death (“The Great Depression”). There was nobody more hurt than the stock owners who had lost all their money that they had spent to buy into the stocks and that their houses were being foreclosed because they were pulling money off of their houses to be able to buy stocks.…

    • 1206 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    Another example tells that So much people bought on margin and could not repay their stocks so it ruined the bank ("Black Tuesday"). This text tells that the banks did not have a safe option with loans, and if they lost money…

    • 594 Words
    • 3 Pages
    Decent Essays
  • Decent Essays

    Since all businesses were in a decline, work was very scarce. Many low class workers with less skills than other employees could not find employment. Many middle class employees were also hit by the hardship of unemployment as they struggled to keep their jobs for long periods of time. Finally, economic derailment occurred when the stock market crashed on Black Tuesday and many people lost substantial amounts of money due to their stock holdings. As stock prices drastically went down on Black Tuesday many people watched as they fell into debt.…

    • 1188 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    The stock market crash sent Wall Street into a panic and also wiped out millions of investors. This day was called “Black Thursday” in the history of the United States. The New York stock market crashed because individuals that had the stock wanted to sell them, and no one was willing to buy. During the roaring twenties, people had spent more on investment, and could no longer pay off their debts and loans, which resulted in the urge to sell their stocks. The following several years experienced a drop in investment…

    • 1748 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    According to the article “The Great Depression Brings Economic Crisis” from the book Great Events, The Stock Market Crash of 1929 caused one of the largest economic depressions in the history of the United States causing many American families to lose nearly all of their money. When this occurred, the United States government did very little to help the citizens of the United States leaving families and the working class to fight for their survival. The Stock Market Crash of 1929 changed the lives of the United States working class as the crash caused money loss, job loss, poor living conditions, lower wages, and struggles for food across America for the working class during the 1930s. The Stock Market Crash of 1929 caused several losses for…

    • 1472 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Great Depression Suicide

    • 1427 Words
    • 6 Pages

    Millions of Americans lost their jobs and money when the stock market crashed. The Great Depression is one of the most devastating experiences of mass hysteria in America. This upsetting event in American history affected everyone. The effects hit everyone in America…

    • 1427 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    The Great Depression was triggered by the stock market crash of 1929. Banks, factories and stores started to fail and eventually they closed, there was a drastic reduction in purchasing goods. The unequal distribution of wealth contributed to the great depression, In the 1920s, the wealthiest one percent owned more than a third of American assets. The economic impact the Great Depression had on the United States was very profound. The amount of jobs lost reached…

    • 1748 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    The Great Depression of 1929-1933 was the longest, deepest, and most widespread depression of the 20th century. The Great Depression started in the United States, but it rapidly spread worldwide. On October 29, 1929, “Black Tuesday” struck Wall Street, which triggered the Great Depression. Many businesses and farmers were bankrupted thus resulting in more than fifteen million people losing their jobs. In addition, over nine thousand banks failed and personnel income, tax revenues, profits and prices dropped dramatically.…

    • 791 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    The Great Depression started because of a huge crash in the stock market within our society. From 1929-1933 the unemployment rate rose drastically from 3.2% to 25%. Reason being is because the country couldn’t keep up with the production of the full employment of the labor force. The output expected wasn’t reached due to the U.S.…

    • 1767 Words
    • 8 Pages
    Decent Essays
  • Decent Essays

    After the stock market crash, many people went into a panic and tried to sell their stocks to any willing buyer. In the book titled, The Crash of ‘29 and The new Deal, Bruce Glassman wrote on page 28 that “On Tuesday, October 29 more than 16 million shares of stocks changed hands, and many stocks closed at half the value they showed that morning”. The value of stocks had dropped to a devastating level so when the stockowners tried to sell their stocks they made little to no money off of it. That put many Americans in the red because they were not able to pay off the loans they took from the bank. In turn, that meant, combined with their already building debt, the banks did not have enough money coming in.…

    • 1478 Words
    • 6 Pages
    Decent Essays