What Caused The Great Depression Essay

Many factors led to the Great Depression. The most popular of which is the fall of the stock exchange in the late 1920s, and early 1930s. Wealthy Americans had been hyper inflating stock prices. Large portions of their assets were tied up into company stocks. When the stock market began to fall, this caused a mass selling of many stocks. A domino like effect spread throughout the market. Now wealthy Americans had lost their nest eggs, companies began to shutter, and liquidity began to dry up.

This led into another cause for the Great Depression. As companies began to lose their stock values, they were forced to close after their liquidity dried up. This caused millions of Americans to lose their jobs. Such a large loss of employments in such a
short time led to a contagion effect on the country’s economy. Mortgages could not be paid, spending dried up, and economic contraction would continue.

A third cause of the Great Depression was the lack of credit available for the nation.
As the text explains in “A Downward Spiral” and “The Banking Crisis,” the middle class began to hoard gold. This exacerbated the problem with liquidity in the market as it was. The country’s monetary system was based on a gold standard. Money supply, or contraction, was based on available gold. This limited the government’s ability to inject needed stimulus into the economy to spur investment when it was needed.

Men were particularly affected by the Great Depression. Their ability to provide for their families had vanished. Men reverted to helping their wives out in the household, and were at times seen as doing “women’s work.” This would drastically change the family dynamic, and women had to carry the burden of leading their households, and taking care of their unemployed husbands.

Veterans were deeply affected by the Great Depression. When their jobs were lost, many marched on Washington and asked for the benefits to be paid out immediately. The government, instead of negotiating, cracked down on these veterans and dispersed them. This left the veterans feeling like they had been cast aside, after having served their
country.

Farmers were also hurt by the Great Depression. Prices for their crops contracted, while their mortgages stayed the same. As farms went out of business, raw materials and food for urban areas slowed down. In normal cases, this would cause increased in prices. Instead, prices continued to retract to remain competitive in ever decreasing liquidity. This held down the purchasing power of farmers, and led to further foreclosures.