Causes Of The Great Depression Essay

The 1920s was a time of prosperity. Then, the Great Depression came along, and hope seemed far away. The infamous Stock Market Crash alone did not cause this time of hardship, but rather many sources eventually leading up to cause this economic crisis.

The over-speculation in the stock market was significant. Banks would loan money to people who were investing the stock market leading to more selling of stocks that had a negative effect. Once the stock market crashed, people could not pay the loans they borrowed from the bank, consequently losing all their life’s savings. Another cause was overproduction and declination of consumer consumption. Many factories and farms were producing more than people could buy. If consumers did not buy, then prices would fall, and industries would dismiss employees. It was all a chain reaction.

Furthermore, another cause was the instability of the world economy. From the aftermath of World War 1, Germany struggled to pay reparations. They borrowed money from the United States. Then, they would use that money to give to France and Britain which eventually fall back into American hands. It was a cycle of debt that never ended, but at least the European countries would buy the overproduced products from the United States.

Naturally, the citizens of America would turn to their

People lost their homes and moved into Hoovervilles (towns made of scraps of metal and wood). They faced starvation and were living day by day from breadlines. There were riots driven by hunger and many vagrants wandered the street. Many suffered from the dust bowl’s unmerciful storms. African Americans were one of the first to be hit with the Great Depression, because they already experienced a state like this before. Mexican Americans were abused by whites because white Americans believed the Mexicans were taking over their jobs, so they wanted them to leave the