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Causes Of The Great Depression Essay

932 words - 4 pages

Imagine a society where over 25% of the population was unemployed. That is what it reached during The Great Depression (“The Great Depression”). During the depression unemployment rates were the highest they have ever been. It is highly speculated to this day on what exactly caused The Great Depression. Most historians agree it was a chain of events, one after another, that brought our country into chaos. Some events were more impactful than others. These events caused pandemonium among the public, which blew it even more out of proportion by trying to save themselves from bankruptcy. The three major events that caused The Great Depression were the Stock Market Crash of 1929, the ...view middle of the document...

The investors would keep fueling the stock market increase until it slowed to a halt in late October 1929. Stocks dropped slightly, and this triggered the Stock Market Crash of 1929 (Pettinger). This event created a domino effect that helped lead to The Great Depression.
The second major event in this chain was the banking crisis. Before The Great Depression hit, our countries banking system was characterized by having numerous small to medium sized firms, which meant they were prone to going bankrupt. As I previously stated, banks had been extremely over-generous with handing out loans. A good percent of these loans was invested into the stock market and lost when it crashed. Some banks even invested depositors’ money themselves into the stock market. The investors were unable to pay back the money to the banks and banks started going under. Bank policies during this time were very poor. They did not have guarantees to their customers that if the bank failed, they would be reimbursed for the deposits like we have nowadays. This caused depositors to rush and withdraw their money, and banks were forced out of business because they didn’t have all the money. By the inauguration of Franklin D. Roosevelt in 1933, the banking system had practically ceased to function. Checks were unable to be trusted because nobody knew if they were worthless or sound (Ganzel). All this pandemonium with the banking system caused the public to panic and make it worse.
The public contributed to starting The Great Depression in many ways. They affected the stock market by being too quick to panic-sell their stocks. Since in this time stocks only seemed to rise, when they started to drop people overreacted. A domino effect was created by people panicking and selling stock because...

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