Causes of the Great Depression
The main cause of the twelve year long Great Depression was the Stock Market Crash in 1929. Wall Street came tumbling down on October 29,1929, which was also referred to as "Black Tuesday" since it was such a dark day for shareholders. Another cause of the Great Depression is the failures of banks. 9,000 banks failed throughout the 1930s due to the uninsured bank deposits. So, people lost all of their money in the bank accounts. Because banks failed and consumers had no money, there was obviously a reduction in purchasing of products and services. This snowball effect continued as people lost their jobs since less products and services were needed, and the unemployment rate rose above 25%. I believe that the Great Depression could have been avoided if people weren't so greedy and if the government would have insured bank accounts.
Causes of the Stock Market Crash
A main reason for the Stock Market Crash in 1929 is the fact that everyone was purchasing shares in the stock market and borrowed money in order to withhold those shares. Once people found out that the stock market prices were suddenly dropping, everyone sold their stocks for much less than they bought them for. In turn, consumers stopped purchasing extravagant items and shares of stock and basically cut back on all of their spending. In my opinion, the Stock Market Crash of 1929 could have been sidestepped if the consumers would only buy shares of stock that they could afford without buying on margin and borrowing from the banks.
Bank and business failures
Many banks failed after the Wall Street Crash of 1929 because so many people withdrew their money from the banks out of panic, while others were unable to get their money due to the fact that the banks had invested in the stock market. Millions of people lost their bank accounts afar the stock market crash because the government didn't insure bank accounts. 9,000 banks failed during the 30s, while 4,000 of these failures were in the year 1933 alone. But, banks were not the only businesses that were affected by the crash. Even the most prosperous businesses such as automobile and railroad companies had failed. Since many banks and businesses failed and the United States was in a depression, many people were laid off and the unemployment rate rose from 3% to 25% in 1929. I think that these bank and business failures could have been avoided if the government would have backed up and insured bank accounts.
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Comments
Good job Ashley!