Causes of Great Depression
ssionMajor causes of the Great Depression- 1929-1939
There is no single cause or obvious set of factors that can explain why the great depression of 1929-1939 occurred. Historians, economists and political scientists have come up with various explanations that place different emphasis on different factors and events. One thing seems clear, however, that the depression was the result of the interaction of a complex set of factors, some economical, some political and some social. This report will concentrate on the economic factors and government policies that led to the great depression. Following are the major causes of the Great Depression: 1. Overproduction (responding to high demand for goods) 2. Banking and Money Policies (low interest rates, buying on credit, raise in interest rates, low reserve rates for banks) 3. Stock Market Practices (buying on margin, bank loans for stock purchases) 4. Political decisions (Smoot-Hawley Tariff, Increase Income Tax)
1. Over Production
Great depression was not due to a single event but due to a series of events that took place prior to 1929. End of World War I is one such event, which left much of Europe destroyed. Americans felt they deserved to reward themselves after the sacrifices of World War I.
The “roaring twenties” was an era when America prospered tremendously. Average output per worker increased 32% in manufacturing and corporate profits rose to 62%.The availability of so many consumer goods, such as electric appliances and automobiles, offered to make life easier. This led to a high demand for such goods, so companies began to produce more and more, in order to meet that demand. But in reality there was under consumption of these goods in U.S. and abroad due to people not having enough cash to buy everything they wanted.
American farms were also overproducing. During the period of World War I, with European farms in ruin, the American farm was a prosperous business. Increased food
There is no single cause or obvious set of factors that can explain why the great depression of 1929-1939 occurred. Historians, economists and political scientists have come up with various explanations that place different emphasis on different factors and events. One thing seems clear, however, that the depression was the result of the interaction of a complex set of factors, some economical, some political and some social. This report will concentrate on the economic factors and government policies that led to the great depression. Following are the major causes of the Great Depression: 1. Overproduction (responding to high demand for goods) 2. Banking and Money Policies (low interest rates, buying on credit, raise in interest rates, low reserve rates for banks) 3. Stock Market Practices (buying on margin, bank loans for stock purchases) 4. Political decisions (Smoot-Hawley Tariff, Increase Income Tax)
1. Over Production
Great depression was not due to a single event but due to a series of events that took place prior to 1929. End of World War I is one such event, which left much of Europe destroyed. Americans felt they deserved to reward themselves after the sacrifices of World War I.
The “roaring twenties” was an era when America prospered tremendously. Average output per worker increased 32% in manufacturing and corporate profits rose to 62%.The availability of so many consumer goods, such as electric appliances and automobiles, offered to make life easier. This led to a high demand for such goods, so companies began to produce more and more, in order to meet that demand. But in reality there was under consumption of these goods in U.S. and abroad due to people not having enough cash to buy everything they wanted.
American farms were also overproducing. During the period of World War I, with European farms in ruin, the American farm was a prosperous business. Increased food