What is one reason for the great depression?

Answer 1

The Stock Market Crash of 1929 (October 24-29, 1929) signaled the beginning of the Great Depression. "Black Thursday" was followed by more losses on the following Monday and Tuesday.

There were several major causes of the Great Depression in the United States.

1. Unequal distribution of wealth. There was not a large middle class. While wages were rising for the majority of workers, they were not keeping pace with the increase in the cost of living or the wealth in the hands of the industrialists and others in the upper income classes.
2. There was over-speculation in the Stock Market, which was not regulated. Many Americans purchased stock on credit. This was known as margin buying.
3. Increased manufacturing and agricultural output, as wages did not keep pace to allow consumers to purchase all that was produced or grown. Hence, inventories increased and agricultural income remained low.
4. Buying on credit, known in the 1920s as installment buying. People purchased things like refrigerators on time, and did not have money to pay for the product in the future, when the bills became due.
5. Federal regulations on businesses also contributed to the cause. Especially favorable to the large corporations were the tax laws which were written to encourage business expansion.
6. Banks were permitted to speculate in land and the stock market with little government regulation.
7. High tariffs and war debts helped spread the depression world wide.

(see the related question below)
There were several major causes of the Great Depression in the United States. 1. Unequal distribution of wealth. There was not a large middle class. While wages were rising for the majority of workers, they were not keeping pace with the increase in the cost of living or the wealth in the hands of the industrialists and others in the upper income classes. 2. There was over speculation in the Stock Market, which was not regulated.Many Americans purchased stock on credit. This was known as margin buying. 3. Increased manufacturing and agricultural output, but wages that did not keep pace for the consumers to purchase all that was produced or grown. Hence, inventories increased and agricultural income remained low. 4. Buying on credit, known in the 1920s as installment buying. People purchased things like refrigerators on time, and did not have money to pay for the product in the future, when the bills became due. 5. Federal regulations on businesses also contributed to the cause. Especially favorable to the large corporations were the taxes laws which were written to encourage business expansion. 6. Banks were permitted to speculate in land and the stock market with little government regulations. 7. High tariffs and war debts helped spread the depression world wide. 8. The Stock Market Crash of 1929 signaled the beginning of the Great Depression.

Answer 2

There were several causes for the depression in America that started in 1929. One of these causes was the Wall Street Crash. This was when the stock market was booming and over 10 million shares were sold as the prices of shares decreased and the continued to fall as sellers tried to find people to buy shares. Then there was a statement issued from the National City Bank saying that due to the heavy selling of shares, many businesses were now under-priced. But, the statement failed to call a halt to the demand for buying shares. On 29th October over 16 million shares were sold as investors tried to sell shares for any price that they could get before the prices fell even lower. The stock market lost 47% of its value in 26 days. The fall in share prices made it difficult for entrepreneurs to raise money to run their businesses so, in a short time, over 100,000 American companies were forced to close so, consequently, many workers lost their jobs. The purchasing power of America fell dramatically and then even more workers became unemployed. Two week after the crash, the stock market lost more than $8,000 billion. After the stock market crash, many people were too afraid to purchase items due to fears of further economic woes. This then led to a decrease in demand for items to be produced so there was a reduction in the workforce so again many people lost their jobs so they could not afford items that they had bought through instalment plans so had their items repossessed. Unemployment rose 25% which meant that there was less spending to help the economic situation. As businesses began failing, the government created the Hawley-Smoot Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation. Then the foreign companies would do the same with their goods so the businessmen found it difficult to sell their manufacturers abroad. This made America lose out on even more money to help the economy rise. This was when the 'cycle of depression' set in which was when reduce demand for consumer goods fell so factories shut down which led to more unemployed people. Then there would be less money to buy goods so again the demand for them fell. More Americans were buying shares on the stock exchange in Wall Street so share prices were rising and there was confidence that it would continue that way. People bought shares on credit expecting to sell them for a profit and settle their debts. This is 'speculation'. But during 1928, share prices did not rise as much in the previous years and many companies were not selling as much goods, so profits fell so less people were willing to buy shares. Some investors would sell their shares before values fell. Small investors would then follow their lead. Also, overproduction was a cause too. This was when there was too many goods being produced in large amounts so, when all of the Americans had bought everything that they wanted, there was a reduced demand for them. Even though many Americans did not want to buy anymore consumer goods, there were still many who could not afford to do so anyway. In 1928, thousands of American families were living on a small amount of money a year so even during the boom years, many Americans still lived 'below the poverty line'. The worst off were farmers, black workers and new immigrants. Also, people in the old industries. As well as this, many people were worried about all of the banks collapsing, so they decided to take out money in large sums before they lost all of their money. Eventually, thousands of banks were forced to shutdown as they had to money to keep them running.

Answer 3

One of the most important factors that led to the Great Depression was the independence of national economies. A major drop in world agricultural prices hurt southern and eastern Europe, where agriculture was small in quantity yet high in cost. When unable to make a profit on the international market, these agricultural countries bought fewer manufactured goods from the more industrial parts of northern Europe, causing a widespread drop in industrial productivity. Restrictions on free trade also limited the economy . Most nations were raising high trade barriers to protect domestic manufacturers from foreign competition. Thus, these two causes combined together to form a major slow-down in the world economy.

Answer 4

There were several major causes of the Great Depression in the United States.

1. Unequal distribution of wealth. There was not a large middle class. While wages were rising for the majority of workers, they were not keeping pace with the increase in the cost of living or the wealth in the hands of the industrialists and others in the upper income classes.

2. There was over speculation in the Stock Market, which was not regulated.

Many Americans purchased stock on credit. This was known as margin buying.

3. Increased manufacturing and agricultural output, but wages that did not keep pace for the consumers to purchase all that was produced or grown. Hence, inventories increased and agricultural income remained low.

4. Buying on credit, known in the 1920s as installment buying. People purchased things like refrigerators on time, and did not have money to pay for the product in the future, when the bills became due.

5. Federal regulations on businesses also contributed to the cause. Especially favorable to the large corporations were the taxes laws which were written

to encourage business expansion.

6. Banks were permitted to speculate in land and the stock market with little

government regulations.

7. High tariffs and war debts helped spread the depression world wide.

8. The Stock Market Crash of 1929 signaled the beginning of the Great Depression.
Historians agree that there is no one cause. or even a major cause, of the Great Depression. There are several causes that do appear near the top on any one's list of causes for the Depression.

1. No regulation of the Stock Market and the practice of buying stocks on margin.

2. Bank failures and no regulation of banking policies with consumer's money.

3. Over production in industry caused a large inventory.

4. Reduction in purchasing power of the consumer.

5. Foreign economic conditions.

Answer 5

Unequal distribution of wealth. There was not a large middle class. While wages were rising for the majority of workers, they were not keeping pace with the increase in the cost of living or the wealth in the hands of the industrialists and others in the upper income classes.

Answer 6

-too much personal debt

-Lack of vegetation/crops

-Collapse of stock market