What Caused the Great Depression?

Topic: FinanceInvesting
Sample donated:
Last updated: March 9, 2019

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.

The stock market crashing (bucket 1) lead to an industry collapse. One of the main reasons of the stock market crash was most likely because too many people may have been investing in one particular stock.This was a major cause of how people lost the money they invested in stocks, which played a major role in people being low on money during The Great Depression. Another reason of The Great Depression was that a large number of independent banks were very weak (bucket 3).

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When one bank failed, the assets of others were frozen while depositors elsewhere had a warning to go and ask for their money. This began a domino effect, when one bank failed so did another. When income and employment values fell because of the depression, bank failures quickly became an epidemic. Document L) Buying on installment (bucket 3) quickly became popular when debt was no longer regarded as shameful.

The whole concept of buying in installment was so that someone could buy something they wanted and make payments towards it until they could pay it off. This sounded like a great plan to people, but consumers were buying goods on installment at a rate faster than their income was expanding. At some point consumers would have to cut back on their purchases which would “sap” the whole country. Document H) Over all I think the main reason for The Great Depression had to do with how people used their money. I feel that people were too over confident in their money, and felt that they could use it as they pleased even when they didn’t have the money for things.

The three main reasons that I listed above, the stock market crash, bank failures, and buying on installment all revolve around money. Which is why I think that those three main reasons were a cause of The Great Depression.


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