Cause And Effects Of The Great Depression

The Great Depression is a terrible economic crisis, a crisis that lasted in America from late 1920s to mid 1930s that left many families suffering without jobs, homes or even food. America produced for, and traded all across the world so this crisis may have started in America but it caused a global effect. Leaving many countries heading towards economic downfall.

The economy started to fall in the 1800s due to The Panic of 1873. During this time the country had many bank crises on its hands, due to this many European investors withdrew from stock shares. A Mass of people pulling out of a stock at once leaves investors not wanting to invest in that company because they will not benefit from it. This causes many companies to go out of business including the railroads. Railroads were very new during this time period so they relied on investors to help run their trains and pay for expenses, without investors the railroads were bankrupt, having no trains meant no transportation of people or products which was heavily relied on. Our country had no way of fast distribution across the country and businesses losing money led the United States into an economic decline. Slowly America started to recover until October 28th 1929 about a decade later the stock market crashed.

Stocks were overvalued, whether it was a house loan, borrowed money or technology, people invested it. With all these investors in companies it caused the value to decline rapidly. Not only did your day to day people invest in stocks bigger companies did too, like banks. When the stock market crashed many people ran to the banks to gather the rest of their money, banks enabled a first come first serve rule until they ran out of money and closed down. Commercial banks were able to stay open due to the government's efforts in lowering the discount rate, allowing some banks to stay