Essay on Stock Market Crash as the Cause of the Great Depression

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What Was the Exact Cause Of The Great Depression? The United States Great Depression leads many people to believe different stories about what actually caused it. The Stock Market Crash in October of 1929 is often referred to as the beginning of the Great Depression, but did it actually cause it? The answer is that it was the spark that lit the flame of the Great Depression. The Great depression was a financial decline that started in 1929 and lasted through most of the 1930s. Its pinpoint was in North America and Europe, but plagued countries around the world (especially developed countries). Unemployment and homelessness sky rocketed and construction practically stopped in many countries. Industrial production declined by 50%,…show more content…
This increased the spending but created debt for the shoppers. Consumers who were deeply in debt risked failure to pay, even when a price deflation occurred and they kept working their jobs. To cope with this dilemma, they drastically cut spending to make payments. Thus, the demand for luxury items and new products dropped. New cars were not selling as fast as they had been. New electronics such as radios were crowded together in display windows. Warehouses began to be jammed and this led to layoffs. Manufacturers read reports of overloaded warehouse and did not care. They believed that is was only temporary and would soon clear up. (Nardo 30-31) Early in September the stock market reached an unsurpassed high. Immediately following this "high", the market began to gradually slide. On the afternoon of October 24, 1929 the great American stock market took a bottomless plunge. Investors finally realized the "stock boom had been an over inflated bubble." Margin investors were being ruined because stock holders tried to pay back debts. By November of 1929, the Dow sank from 400 to 145. In three days, the New York Stock Exchange removed over 5 billion dollars worth of share values. By the end of the 1929 stock market crash, 16 billion dollars had been erased off stock capitalization. At that point it seemed as if nothing else could possibly go wrong, but it did. Bank investors had invested their deposits
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