Great Depression Causes

From the year 1929 until the year 1941, a lengthy period of deflation swept the world off its feet with its economic downturn; a period called the Great Depression. There were various causes for it, and it impacted much of the world. There were great efforts made to resolve the issues that came with the Great Depression. The whole world struggled with this circumstance, not to mention the United States of America, Brazil, and Canada.
The United States of America set itself up for the Great Depression. The expression ‘too good to be true’ was precisely what happened to the people during this time. Before the Great Depression, everything seemed ‘perfect’ to everyone. In the 1920s, during the presidency of Calvin Coolidge, economic growth …show more content…
This meant that he believed that the market should be left alone without much interference from the government (Blink and Dorton 186). Because of the lack of regulations imposed by the government, many bankers grew to power: some for not the best of reasons. A group of bankers called the ‘Titans of Wall Street’ rose to the top; this included bankers such as Charles Mitchell and J.P. Morgan Jr. (Berliner 184). These bankers were some of the large investors of stock (Berliner 184). They would encourage people to trust the stock market. There was something called “buying on the margin” at this time (Berliner 184). People were able to buy stock with only 10% of what it was worth and was able to borrow the rest of the 90% (Berliner 184). Credit was easy to come by during these days, and people trusted the bank and the market enough to be able to put all their life savings in (Berliner 184). When they did this, they would watch the prices rise higher as the large …show more content…
Even though during the 1920s GDP (Gross Domestic Product) was increasing, this did not mean that the population was evenly receiving higher income as a whole. There were great income inequalities with such rapid growth. “[By] 1929, almost one-half of families in the United States lived at subsistence level or below” (Berlinger 185). The rich became richer and the poor became poorer.With less purchasing power, there would be less consumption, meaning that there would be less money circulating the economy. That would also lead to slow economic growth. Furthermore, the rich would have spending money, but they could spend on foreign goods and services which would not help the United States.
In addition, because the United States utilized the export-led growth strategy, there was much specialization (Blink and Dorton 372); this meant that the country focused on improving a certain export or exports they could earn revenue off. The United States’s economy “depended upon the automobile and construction industries and the growing aviation, motion picture and consumer product companies” (Berlinger 185). However, these industries and companies were not enough to keep the economy running smoothly when production all throughout began to

Show More

Causes Of The Great Depression