Causes of the Great Depression
One major cause of the great depression is the stock market crash of 1929. the crash caused many people to loose their life savings due to bank and business failures. Banks and businesses invested money into the stock market and when it crashed people didn’t get to the bank fast enough to get their money. Before the crash, people would borrow money for small down payments and prices ended up going up faster than value.
Also, there was a lot of unemployment and no one could purchase merchandise because the economy was so bad.
Many droughts happened in the south, making it difficult for people to pay their taxes. Large businesses stopped trading overseas because the tariffs were raised.
Supply and demand were a big part of causing the great depression. When people stopped bringing in money, they would stop buying products while the companies and farmers kept making the products continuously.
Causes of the Stock Market Crash
A huge reason the stock market crashed in 1929 was buying on margin. Buying on margin was when people borrowed money from the bank for small down payments. Sometimes, the stock was collateral for the loan and when the stock lost value it no longer covered the margin.
Another reason was that the demand for expensive items decreased, which meant that the employees that were hired buy companies were no longer needed to produce. The employees were then laid off and most of the nation was unemployed.
Story of the Stock Market Crash
In early 1929, many people wanted in on the stock market. There were so many positive things about it that made everyone think it would never crash. In march however, the first warning sign made it obvious the system wasn’t flawless. On the 25th prices started to fall and people started to panic about their money. The small panic stopped when Charles Mitchell, a banker, said his bank would continue giving out money. There were many other small but obvious warning signs prior to the crash that many didn’t think anything of but made a huge impact later.
On October 24, or Black Thursday, prices of stocks dropped insanely. People were selling stocks and banks started sending out margin calls.
However, the next Tuesday was when the real panic struck. All stock prices fell and no one was buying so the market was closed for a couple days, but it really didn’t help anything. After that day, the stock market didn’t come back up for almost three years.
Comments
Thank you!
Well done Jamie!