Causes of the Great Depression
Pre-AP US History 8th Hour
Some of the top Causes
Stock Market Crash of 1929
During the 1920s, the American economy thrived thanks to many different people using installment buying for purchasing consumer goods and buying on margin being used to purchase stocks and shares in different companies. However, people didn't realize that the more they tried to make a life of luxury, the more they debt they accumulated. In September of 1929, stock value began to decrease and citizens began to panic, trading in their stocks for money. On the day before the crash, over 12 million stocks were traded into the market. The value of stocks fell completely on October 29th, 1929, leaving billions of dollars worth of stocks lost, causing banks to lose money, people to lose their savings, and the American economy to go into free fall.
America's Economic policy with Europe
The American market was simulated by trade with European and Asian nations but when the global depression hit it made trade go down and made inflation go up in some places. The main thing that brought the great economy of the world was the failure of the gold standard. With money in nations that were backed with gold saw a decrease in value in paper bills and many jumped off the stantard like the US then backed their money on other currencies. Another main cause was the decline in world trade because countrys were trying to conserve their own prices of goods from foreign competitors. This began around the world when Herbert Hoover enforced the Hawly-smoot tariff act as to make the agricultural goods be raised in price.
Bank failures
By 1933, 11,000 of the nation’s 25,000 banks had disappeared. This was due to banks struggling to get deposits and get loans out to farmers and other businesses. In the early 30’s farmers were unable to put money into banks because farmers had a very hard time making money. During the first 10 months of the 1930’s 744 banks closed. 9,000 banks closed by the end of the decade.
What is a Stock Market Crash?
A Stock Market Crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market resulting in a loss of paper wealth.