Well, the stock market crash in October of 1929 was a cause of the Great Depression to start off. The stock market was going through the roof with how great it was doing. Prosperity seemed limitless. How the whole investing thing worked out in the 1920's and '30's was really kind of dumb. Investors bought borrowed money, hint the bought BORROWED money, from their brokers. And where do you think brokers got their money? They went to banks. When the stocks failed and investors needed to default, the money was just gone. Lets just say some millionaires lost everything, even sometimes overnight.
During the Great Depression there were many bank failiures. In 1930 alone, 9000 banks failed leaving more people then I could count without money they hoped they would see again. Most surviving banks didn't want to take any unsure risks that could make them fail, so they were more cautious about giving out loans.The next reason was that people stopped making purchases. Anything people could saving money on with not buying, they wouldn't buy it. I think this is one of the biggest causes because it led to many many problems. People stop buying items means less items produced, leading to factories not needing as many workers. Therefore people were cut off, causing them not to have any money to spend, it's just a big circle. People couldn't pay for loans, cars, and everything they had to pay off, causing a lot of people to have things reposessed. Not to mention to unemployment rate was above 25%! Thats horrible, and I couldnt imagine living like that, even though were facing cuts like no other now-a-days.http://www.angelfire.com/co/pscst/stock.htmlhttp://en.wikipedia.org/wiki/Great_Depression
Comments