Causes of the Great Depression
Causes of Economic Depression
The Great Depression was caused by three main things: The Stock Market Crash of 1929, Bank failures, and American economic policy with Europe.
During the 1920s the economy was very strong. It rose at a constant rate that it was almost unlikely to fall. The constant growth of the economy made it very popular. It became the word on the street and people found it as a way to get rich very easily. Many people wanted to buy stocks but did not have money to, so, they bought stocks on margin. Buying on margin meant the buyer only had to pay 10-20% of the cost of the stock and they borrow 80-90% from a broker. The risk of buying stocks on margin is if the price stock fell lower than the loan amount, the broker would most likely call a “margin call” and the buyer would have to come up with the money to pay off the loaned amount immediately. The growing numbers of investors during the early 1929 and the industrial stock exchange reaching its peak caused the stock market to start falling. It started On March 25, 1929 when a mini crash happened and brokers started issuing “margin calls”. It was quickly prevented by a banker named Charles Mitchell by announcing that they would still keep lending. On the summer of 1929, many other warnings of the big crash surfaced such as the low production of steel, house construction slowed down, car loans was scarce and etc. On the morning of October 24, 1929, the stock market started plummeting. Many investors were selling their stocks and margin calls were issued. It was temporarily stopped by Richard Whitney, vice president of the exchange, buy purchasing a large block of shares for U.S. Steel and buying “blue chip” stocks, such as the Dow Jones Industries. This tactic succeeded on stopping the slide. By the end of the day, many people were buying stocks at what they considered as “bargain prices”. 12.9 million Shares were sold by the end of October 24, 1929, double the previous record. Four days
The Great Depression was caused by three main things: The Stock Market Crash of 1929, Bank failures, and American economic policy with Europe.
During the 1920s the economy was very strong. It rose at a constant rate that it was almost unlikely to fall. The constant growth of the economy made it very popular. It became the word on the street and people found it as a way to get rich very easily. Many people wanted to buy stocks but did not have money to, so, they bought stocks on margin. Buying on margin meant the buyer only had to pay 10-20% of the cost of the stock and they borrow 80-90% from a broker. The risk of buying stocks on margin is if the price stock fell lower than the loan amount, the broker would most likely call a “margin call” and the buyer would have to come up with the money to pay off the loaned amount immediately. The growing numbers of investors during the early 1929 and the industrial stock exchange reaching its peak caused the stock market to start falling. It started On March 25, 1929 when a mini crash happened and brokers started issuing “margin calls”. It was quickly prevented by a banker named Charles Mitchell by announcing that they would still keep lending. On the summer of 1929, many other warnings of the big crash surfaced such as the low production of steel, house construction slowed down, car loans was scarce and etc. On the morning of October 24, 1929, the stock market started plummeting. Many investors were selling their stocks and margin calls were issued. It was temporarily stopped by Richard Whitney, vice president of the exchange, buy purchasing a large block of shares for U.S. Steel and buying “blue chip” stocks, such as the Dow Jones Industries. This tactic succeeded on stopping the slide. By the end of the day, many people were buying stocks at what they considered as “bargain prices”. 12.9 million Shares were sold by the end of October 24, 1929, double the previous record. Four days