Causes of the Great Depression Essay

1108 Words 5 Pages
The United States has experienced recessions about every twenty years (give or take) since the beginning of the Industrial Revolution. Nothing that had happened before was quite this serious, chaotic, or as long lasting as the Great Depression.
The crash was felt far beyond those on the trading floors. Speculators who borrowed money from the banks to buy their stocks could not repay the loans because they could not sell stocks, because no one else would buy them. This caused many banks to fail, and shut their doors. Since bank deposits were not insured before the 1930s, depositors’ lost their money, which in most cases was all the money that people had. The stock market crash had only deepened the course of the Great Depression in many
…show more content…
These foreign trade restrictions furthered the limitation for the market for American goods… especially agricultural products.
The downturn began very slowly, and almost invisibly. After 1927, consumer spending fell, and housing construction came to a halt. Company’s inventories started piling up, and in1928 and 1929 manufacturers began to cut back on how much they produced, and started to lay off workers. Lowered income and buying power in turn reinforced the downturn. By the summer of 1929, the economy was obviously in a recession. Though the market crash’s consequences added to the Great Depression, the longstanding flaws in America’s economy accounted for its length and cruelty. Agriculture, in particular, had never recovered from the recession of 1920-1921. Farmers faced fixed high costs for equipment/tools and mortgages acquired during the high inflationary war years. At the same time the prices began to fall because of over production, which in turn forced the farmers to default on mortgage payments and risk foreclosure on their land. Since farmers accounted for about ¼ of the nations employed workers in 1929, their difficulties began to weaken the overall economic structure. Other industries also had experienced an economic downturn during the highly prosperous 1920s. The older industries (mining, textiles, lumbering, and shipping) faltered. Newer and more successful consumer-based industries like food processing, chemicals, appliances