Preview

The Cause and Effects of the Great Depression

Better Essays
Open Document
Open Document
1441 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
The Cause and Effects of the Great Depression
Many people speculate that the stock market crash of 1929 was the main cause of The Great Depression. In fact, The Great Depression was caused by a series of factors, and the effects of the depression were felt for many years after the stock market crash of 1929. By looking at the stock market crash of 1929, bank failures, reduction of purchasing, American economic policy with Europe, and drought conditions, it becomes apparent that The Great Depression was caused by more than just the stock market crash. The effects were detrimental beyond the financial crisis experienced during this time period. The first and most obvious known factor in the development of The Great Depression is the stock market crash of 1929. The Money Alert website states that, “When the stock market crashed in 1929, it didn’t happen on a single day. Instead, the stock market continued to plummet over the course of a few days setting in motion one of the most devastating periods in the history of the United States” (The Money Alert). Many investors would buy stocks on a margin where they would purchase the stocks with borrowed money. This was a great option for buyers when the stock market was on the rise. However, when the stocks plummeted, the financial institutions that had loaned the money for the stock purchase went to collect the capital that had been loaned out and were unable to do so. This, in effect, caused banks to lose money as a result of being unable to collect on the debt, and the investors were unable to collect their losses. In addition to private investors, banks and businesses were investing in margin loans as well. So, these poor investment strategies led the banking industry to lose the majority of their assets, including money from bank customers that had no knowledge that their money was being used for this purpose. Since no government regulations were in place to protect investors and banks in this circumstance, this ultimately led to the effect of the stock


Cited: Bonnifield, Paul. “1930 's Dust Bowl.” The Dust Bowl Men, Dirt and Depression. 5 Oct. 2007. Web. 4 Nov. 2010. Kelly, Martin. “Top 5 Causes of the Great Depression.” About.com:American History, 2010. Web. 4 Nov. 2010. Kelly, Martin. “What is the Smoot-Hawley Tariff.” About.com:American History, 2010. Web. 4 Nov. 2010. “The Stock Market Crash of 1929.” The Money Alert; NY
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Great Depression DBQ
    • 563 Words
    • 3 Pages

    Great Depression DBQ

    The first main cause of the great depression was economic reasoning. Document L states how there was a weak banking structure and the failure of one bank led to the failures of others. This is important because the people caused the the crash. When the stocks went down many people rushed to the bank to take their money out. In document M, it stated how people bought all they could afford. By…

    • 563 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    DBQ: The Great Depression
    • 531 Words
    • 3 Pages

    DBQ: The Great Depression

    The Great Depression was caused by three major factors. The first was because of the collapse of the stock market and fear came as a result.The second was because of the high unemployment of civilians. The third and last was because of the act of protectionism the United States enforced. These all contributed equally to the Great Depression of 1930.…

    • 531 Words
    • 3 Pages
    Good Essays
    Read More
  • Better Essays

    No Promises in the Wind/Great Depression Research Paper
    • 2193 Words
    • 6 Pages

    No Promises in the Wind/Great Depression Research Paper

    The Great Depression had many causes that built up to make it as big as it was. During World War I the U.S. had loaned supplies and money to their European Allies; not having these supplies or money caused the countries to go into debt making the depression go worldwide. The U.S. had a weak economy. There was an inability of the political and financial institutions to cope with the downward spiral that had started in the late twenties. Even after political intervention fifteen percent of the work force were unemployed. The biggest cause of the Great Depression was the 1929 Stock Market Crash. On October 29, 1929 stock market prices dropped dramatically and continued to drop for the next three years. “Stock prices in the United States continued to fall, until by late 1932 they had dropped to 20% of there value in 1929”(Britanica 1).…

    • 2193 Words
    • 6 Pages
    Better Essays
    Read More
  • Good Essays

    Great Depression Dbq
    • 1188 Words
    • 5 Pages

    Great Depression Dbq

    The stock market crash was the beginning of the Great Depression but it was not solely the main cause of it. There was many different causes of the Great Depression like diversification and how the there was too few industries that could not handle the demands of the economy. Another big part of the Depression was the weaker consumer and how the businesses seemed to be taking more of the profits and giving the employees less to live on. The last cause is the increase in debt, people could not…

    • 1188 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Cause And Effect Essay: Causes Of The Great Depression
    • 420 Words
    • 2 Pages

    Cause And Effect Essay: Causes Of The Great Depression

    One of the first causes of the Great Depression was the stock market crash. It began on October 24, 1929, also known as Black Tuesday , and was the most devastating stock market crash in the history of the United States. The stock market crash lead to the deflation of the United States money and the decline in the economy. Many Americans used the stock market as a way to make easy money. Investing in companies thinking they could over turn a quick profit with little work. Little did they know what would happen of a day…

    • 420 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Three Events That Changed America
    • 1277 Words
    • 6 Pages

    Three Events That Changed America

    The Great Depression all started when the stock’s value started to plummet with no hope of recovery (Black Tuesday), people started to panic. Everyone who owned stock was trying to sell, but no one was willing to buy. This caused the stock market to suffer even more. The Stock Market Crash was only the beginning. Almost all the banks at this time put their clients’ money into the stock market.…

    • 1277 Words
    • 6 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    What Caused the Great Depression?
    • 379 Words
    • 2 Pages

    What Caused the Great Depression?

    The stock market crash, bank failures, and the buying of consumer goods on installment or margin, are just a few of the many causes of The Great Depression. During this time period the United States suffered greatly because of the depression. Many people were also not able to work or afford the things they used to be able to.…

    • 379 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    What caused the great Depression
    • 1150 Words
    • 5 Pages

    What caused the great Depression

    Depression and a “Great” Depression have two totally different definitions. Hence it is all in the name. Well a great depression not only affects on country but many countries. Many economic historians say that it was not just caused by one particular thing, but many things. The depression originated in the U.S. after the fall in stock prices that began in October, 29, 1929-1941 known as “Black Tuesday”.…

    • 1150 Words
    • 5 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    The Causes Of The Great Depression
    • 120 Words
    • 1 Page

    The Causes Of The Great Depression

    The Great Depression was the toughest and the longest economic recession in the industrialized world, in most of the countries it started in 1929 and lasted till 1939. The Great Depression was the result of many causes; some of these causes are the crash of the stock market, and banks were not able to lend money because huge numbers of people were withdrawing their money. This withdrawal also caused the banks to fail. Another reason is that people were afraid of buying products and services after the stock market crash which lead to a huge decrease in the demand of products and services, this decrease in demands and the unwillingness to spend money made the level of unemployment increase sharply.…

    • 120 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Good Essays

    Three Causes Of The Great Depression
    • 585 Words
    • 3 Pages

    Three Causes Of The Great Depression

    In the late 1920's and early 1930's the Great Depression arose and effected about 99% of American citizens were endorsed into extreme poverty from purchasing stocks with no experience and letting the stock market fall upon them. Most Americans were forced to sell all of their possessions and led them into extreme poverty. The three causes of the Great Depression are Banks, Overproduction .vs. Under-consumption and Bad Buying.…

    • 585 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    The Cause And Effects Of The Great Depression
    • 393 Words
    • 2 Pages

    The Cause And Effects Of The Great Depression

    The Great Crash of 1929 brought American to the great depression that was the longest, deepest and the greatest widespread economic depression of the 20th century. Before “Black Tuesday” America’s economic and production was at an all-time high. The prices of the stock exchange continued to increase upward, which created a sense of security related to the profits. There were a few warning signs of disaster, nevertheless, it was not bold enough to overcome the “chatter of the ticker-tape machine”. On October 29, 1929 the stock market had a catastrophic crash, which sent the American economy to swirl downwards. One of the causes of the crash was triggered the British. The British raised interest rates in an effort to bring back investment that was lured away from American…

    • 393 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    What Are The Causes Of The Great Depression Essay
    • 686 Words
    • 3 Pages

    What Are The Causes Of The Great Depression Essay

    Prior to the economic downfall of 1929, money kept pouring in from different people throughout the whole united states. People started investing money into the bank and borrowing it as well. It is said that more than one hundred thousand Americans held stocks during the summer of 1929. Although many people disagree, the stock market crash of 1929 was not the sole cause of The Great Depression, but it did accelerate the global economic collapse. Another cause was because most Americans started putting their purchases on credit, which is when someone does not have the money at the time, so they save it for when they had money and paid for it, even though it seldom happened that they actually paid.…

    • 686 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Reconstruction Vs Progressive Era
    • 605 Words
    • 3 Pages

    Reconstruction Vs Progressive Era

    The great depression was caused when the stock market crashed. The beginning of the Great Depression was on Oct. 29, 1929 that day is now known as Black Tuesday. Sellers were panicking because there was no buyers. Share prices deflated and margin loans came due. Another reason for the Great Depression was because of terrible banking systems there were banks that ran independent and unregulated. When the stock market crashed many banks failed to stay open about 11,000 banks were closed.…

    • 605 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Great Depression: Causes Of The Depression
    • 273 Words
    • 2 Pages

    Great Depression: Causes Of The Depression

    My three major points are The Dust Bowl, World War 1, and the Stock Market Crash. These three major points put millions of people in a sad place, A place nobody wanted to be at. Everyone wanted to believe it was a dream. Doing their best to raise their children. Caused a whole lot of damage to the crops, getting around to places, and especially losing loved ones. This was all happing in Kansas, Oklahoma, Texas, and New Mexico; from Nevada and Arkansas.…

    • 273 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Effects of the Great Depression
    • 445 Words
    • 2 Pages

    Effects of the Great Depression

    On October 29, 1929, the seemingly-thriving stock market crashed, causing many Americans to lose years’ worth of savings and plunging the country into what is called the Great Depression. This period was the worst economic downfall the country has ever seen, so the people were unprepared for the hardships they would face. The Great Depression was a very difficult time for a majority of Americans and they had to go to extremes to cope with the hardships and to continue to survive.…

    • 445 Words
    • 2 Pages
    Satisfactory Essays
    Read More

Related Topics