What caused the great Depression

Topics: Great Depression, Business cycle, Unemployment Pages: 3 (1150 words) Published: December 12, 2013
Depression and a “Great” Depression have two totally different definitions. Hence it is all in the name. Well a great depression not only affects on country but many countries. Many economic historians say that it was not just caused by one particular thing, but many things. The depression originated in the U.S. after the fall in stock prices that began in October, 29, 1929-1941 known as “Black Tuesday”.

A lot of people started to invest in stocks, during the 1920s, when everything was going great (DocJ)! Everyone was making profit, sharing profits, basically gambling with their stocks (DocF). However, stocks can go up simply because buyers believed they will be able to sell the stock for more next week or next month. Most of the time investors were eager to invest in the stock so some of them bought there’s on credit. That is the investor pays a certain percent and the broker gets the rest of the money from the bank (DocG). But at the end everyone lost. Why because of speculation, the stock market crashed. The stock market was trigged by British who raised their interest rates in an effort to bring back capital lured abroad by American investments (DocD). Foreign investors and wary domestic-speculators began to dump their “insecurities” and orgy of selling followed. People began to panic and sell. Two months after the crash-stock holders had lost 40 million paper values or more than the total cost of war to the U.S. That was a major cause of the Great depression because a lot of people lost money because of the crash.

Before “foreign investors and domestic speculators began to dump their insecurities and started selling.” Farmers were very frustrated because the wheat shot up to 3 dollars a bushel. But peace bought an end to government guaranteed high prices and to massive purchase by other nations, as foreign production reentered the stream of world commerce. Now gasoline engine tractors helped farmers produce more, that meant more price dampening...
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