What Caused The Great Depression Essay

The Great Depression, one of America’s worst economic downturns in history, was directly fueled by the financial prosperity of the 1920s. Several major sources of this include overproduction, banking failure and panics, the stock market crash, consumer buying, speculation, and low wages. Each of these causes had signs that were blatantly ignored during the 1920s.

Overproduction, the production of too many products and not enough people purchasing them, was a major part of the 1920s as stated previously. During the economic boom of the 20s, new technologies such as the washing machine, the stove, the radio, and the electric refrigerator were created. These products were seen as luxuries by American society, so they were produced at a high-speed rate. Still, at this time many rural households lacked electricity. This made these appliances available to urban and suburban homes, but once the appeal of them wore off, there were still thousands available across the US that rural homes had no use of. Some consumers didn’t even have the money to purchase these goods. Additionally, farmers struggled with the post-war surplus of crops along with cheap crop prices. They grew more than

During the 20s, stocks rose dramatically in value and Americans bought them with the hopes of becoming rich quickly. This fueled the stock market. However, similarly to installment buying, people bought stocks on margin and promised to pay back the borrowed money at a later time when they were ready to sell the stock. This was a flawed system though, mainly because if a stock’s price dropped, Americans didn’t have the funds to cover their losses (https://www.yonkerspublicschools.org/cms/lib/NY01814060/Centricity/Domain/4975/The%20Causes%20of%20the%20Great%20Depression%20.pdf). The amount of stocks being purchased on margin should’ve been an indicator of a recession in the near