Causes Of The Great Depression Essay
Leading Cause of the Great Depression During the Roaring Twenties, the business industry and economy skyrocketed, and many people invested in the New York Stock Exchange in the hopes of becoming rich. In 1929, stock prices were higher than ever, and many believed that the price levels would remain high. Unfortunately for the American people, this wealth did not last for very long. Factors such as the heavy level of margin buying – the purchase of stock on credit – and overpriced stocks led to the devastating “Black Tuesday”. When the market finally plummeted, the American population immediately went into a frenzied panic, and many attempted to remove their money before they lost it all. For many, all profit was lost, and people were left
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By 1932, an additional 5102 banks went out of business. Families lost their life savings overnight. Thirty-eight states had adopted restrictions on withdrawals in an effort to forestall the panic. Bank failures increased in 1933, and Franklin Roosevelt deemed remedying these failing financial institutions his first priority after being inaugurated (Richardson et al).
The reason being for this mass shutdown of banks was because of the lack of money. During the Great Depression, banks would loan money out to citizens with the expectancy of receiving that money back at a later time. As time progressed, more and more people were unable to pay their loans back to the bank, causing them to go bankrupt. To make matters even worse, people started coming to the banks to withdraw their own money, but the banks were unable to give them anything because of the shortages. This created panic amongst the American population, and people began rushing to the banks in hope of getting some of their money back. In an image from DocsTeach, the photograph displays a gathering of people “milling about” the outside of a bank. With the door being blocked and the windows covered, the majority of those people probably did not retrieve any money. Banks soon were left ravaged and penniless, forcing them to
By 1932, an additional 5102 banks went out of business. Families lost their life savings overnight. Thirty-eight states had adopted restrictions on withdrawals in an effort to forestall the panic. Bank failures increased in 1933, and Franklin Roosevelt deemed remedying these failing financial institutions his first priority after being inaugurated (Richardson et al).
The reason being for this mass shutdown of banks was because of the lack of money. During the Great Depression, banks would loan money out to citizens with the expectancy of receiving that money back at a later time. As time progressed, more and more people were unable to pay their loans back to the bank, causing them to go bankrupt. To make matters even worse, people started coming to the banks to withdraw their own money, but the banks were unable to give them anything because of the shortages. This created panic amongst the American population, and people began rushing to the banks in hope of getting some of their money back. In an image from DocsTeach, the photograph displays a gathering of people “milling about” the outside of a bank. With the door being blocked and the windows covered, the majority of those people probably did not retrieve any money. Banks soon were left ravaged and penniless, forcing them to