The Major Causes Of The Great Depression

1100 Words5 Pages
A. Explain the major causes of the Great Depression

There were an innumerable of causes to the Great Depression from the Black Tuesday, economic policies and even a drought in America. To kick off the Great Depression the stock market crashed and $40 billion dollars in American assets were lost in the blink of an eye on what is recalled as Black Tuesday. This affected nearly 700 banks that all eventually failed and caused the many other banks that were able to stay afloat to become reluctant to loan any money out. Without new loans, there was no new money to be spent, causing the government to enact economic policies. The Smoot-Hawley Tariff was created in 1930 to enforce heavy taxes on American Trade to help prevent American Companies from going under (Norton, 2015). International commerce however, had a net negative effect thanks to this fiscal policy because foreign nations ceased trade with American businesses reacting the new tariffs. Additionally American farmers had begun to experience treacherous drought. Unable to produce crops, thousands of farmers were unable to contribute to taxes adding yet another cause of the Great Depression.

B. Describe three ways that the New Deal sought to address the problems of the Great Depression.

During the 1920’s many banks took part in risky investments. After the market bubbles burst and agriculture prices collapsed, many of the loans banks had made went bad. Banks were incapable of funding withdrawals from
Open Document