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3 causes of the great depression essay

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America was able to use its great supply of raw materials to produce steel, chemicals, glass, and machinery that became the foundation of an enormous boom in consumer goods Samuelson, 2.

Many US citizens invested on the stock market, speculating to make a quick profit. This great prosperity ended in October 1929. The Great Depression of the thirties remains the most important economic event in American history. The stock market crash in October 1929 is believed to be the immediate cause of the Great Depression, but there were many other factors and long-term causes that developed in the years prior to the depression.

Many US citizens were never participating in the boom from the start. The coal mining industry had expanded greatly, creating many jobs, but with the introduction of oil and gas, the production of coal was decreased along with the amount of jobs. The cotton industry experienced similar unemployment problems.

Explain the Causes and Effects of the Great Depression.

In the agricultural industry, an increase in production was met with a decrease in demand, so farmers also became unemployed. The American farms and factories produced large amounts of goods and products during the prosperity before the Depression.

The factories and farms still continued to produce at the same rate, but demand for their products was decreasing. The American Federation of Labor fell from 5.

Harding was a Republican as well as a laissez-faire capitalist who advocated policies which reduced taxes and regulation, allowed monopolies to form, and allowed the inequality of wealth and income to reach record levels Tanner, 3.

Between May 1928 and September 1929, the average prices of stocks rose 40 percent. Stock prices rose so quickly that at the end of the decade, some people became rich overnight by buying and selling stocks Matthews, 3. Between 1920 and 1929 the number of shareowners rose from 4 million to 20 million Temin, 45.

With artificially low interest rates and a booming economy, people and companies invested in over-priced stocks. During 1928 and 1929, the prices of many stocks went up faster than the value of the companies the stocks represented.

Many people bought expensive luxury items using money they did not have.

Essay: The Great Depression

Installment buying allowed people to make a monthly, weekly, or yearly payment on an item that they wanted or needed. Buying on credit and installment buying left millions of people in debt. Installment buying allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit. There was a big drop in consumer spending, which lowered prices, which meant that farmers, businesses, and nations could not repay their debts.

The Great Depression Essay: Causes and Influence

Rising debt led to restrictions on new loans, which led to scarce credit, less borrowing, lower prices, more bankruptcies, and so on Samuelson, 1. Stock values plummeted, stockholders were wiped out, banks and factories shut down, and millions of Americans were left jobless and penniless. Although the Stock Market Crash in October of 1929 certainly began the Great Depression, there were many events that led to the gradual decline of the economy.

Uneven distribution of income among workers also contributed to the slump. Some farmers lost so much money they could not pay the mortgage on their farm and were forced to rent their land or move. Bank failures in the agricultural areas became more frequent. Workers in the coal, railroad, and textile industry did not share in the prosperity either. Workers reduced their spending to hold down their debts, the amount of money in circulation decreased, and business became even worse.

The Stock Market Crash was an immediate cause of the Great Depression, but there were many long-term causes that gradually weakened the economy. Lessons from the Great Depression.