Great Depression Causes

The 1920’s were a time of growth and change for most Americans. New inventions such as the car, washing machines, and radios made their way into the homes of many. Americans also had more leisure time on their hands, and could now see movies in theaters. However, the 1920’s weren’t all good times. With the introduction of credit as well as debt no longer being viewed as shameful, things would soon change. Farmers were going into debt, and as a result started to grow more crops than they could sell. At the end of the 20’s, things would take a major turn. America would enter the Great Depression, the longest period of economic recession America had ever seen. The causes of the Great Depression were speculation and installment buying, income …show more content…
In 1927, a speculation boom took place that would intensify in the years to come. Speculation can be defined simply as investors putting their money into stocks in hopes of making a quick profit. This was a very risky thing to do, but it quickly gained popularity. In fact, John T. Raskob believed that if one, “invests in good common stocks and allows the dividends...to accumulate, he will at the end of twenty years have at least eighty thousand dollars and an income from investments of around four hundred dollars a month,” (Doc. 2). As a result he also believed that, “because anyone can do that, I am firm in my belief that anyone not only can be rich but ought to be rich,” (Doc. 2). Raskob wasn’t the only one who held this belief at the time. This was the reason why people began to partake in speculating. It was a chance to make large amounts of money in a short amount of time. But on October 29, 1929, the stock market crashed, and millions of investors tried to sell their shares. The New York Times headline on this day read: “Stock Prices Slump 14,000,000,000 in Nationwide Stampede to Unload; Bankers to Support Market Today,” (Doc. 3). The stock market had crashed due to speculation, ultimately catapulting America into the Great Depression in an instant. Installment buying by definition is when one purchases an item …show more content…
You were either extremely wealthy, or you were living in poverty. 70% of families were making less than $2,500 a year which was the minimum amount needed for a decent standard of living. Gladys Caldwell spoke about her daily life in the late 20’s saying, “I work in the weavin’ room and I get $1.80 a day. That’s $9.95 a week for five and a half days,” (Doc. 7). Caldwell had five children and said that it took $16 a week to feed her family. Her husband worked four jobs and earned $12.85 weekly. Together, they earned about $22.80 weekly. The Caldwell family was an example of how both partners in a marriage could be employed, even working multiple jobs, but still struggle to maintain a decent standard of living. Families such as the Caldwell family eventually went into debt as a result of being underpaid. With 92% of Americans making $5000 or less annually (Doc. 9), they could not afford “luxury items” that companies were producing. Manufacturers had overproduced, and with no one to purchase these items, sales fell drastically. For example, an advertisement for a boat was placed in the catalogue “Fortune” in 1930 costing anywhere from $3,150 to $12,950 (Doc. 8). Only the top 2% of people could afford this product, which was not nearly enough to keep businesses running. Businesses as a result lowered their prices so much that they made no profit.

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Causes Of The Great Depression