What Caused the Great Depression

Topics: Wall Street Crash of 1929, Great Depression, Stock market Pages: 1 (477 words) Published: April 7, 2013

“What caused the Great Depression?”
It was not just one specific factor that caused the Great Depression, there were many factors causing the economy to collapse. It is yet still unknown the main cause of the great depression, it is a question that will remain standing. Although most think the main cause was the 1929 crash of the stock market, still none agreed upon that. The 1929 crash of the stock market was not “the” cause of the great depression; however it was “one” of the causes. The unequal distribution of wealth, the rising unemployment rate and the panic of the American people had enormous effects on the economy. Nonetheless, the 1929 crash of the stock market played an extremely significant role as well.

The crash of the stock market, on October 29th, 1929 – (known as black Tuesday), wiped out most of the Americans’ savings. It was the time of prosperity when the Americans were first introduced to stocks, and they didn’t know any better, they knew nothing about diversification or financial planning. They had a new toy which they were happy with and enjoyed, until the crash hit and cleared out all their investments. Many banks also had their depositors’ money invested in stocks, when the stock market crash came about, all those banks failed! Subsequently, the people that did not invest money in stocks lost their money in the failing banks, in addition to those who lost everything in the stock market. To make things worse, the government did not take firm decisions concerning this. The government believed it was okay to let the economy go all the way down as there is nowhere else for it to go but up. That was true, but how long was it going to take to get back up? (http://www.investopedia.com/articles/economics/08/cause-of-great-depression.asp#axzz2DeeRIJu1) Panic was spreading throughout the nation; the people were traumatized and terrified. They held on to all the money they had, no money was being spent and no products were being...
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