What Caused the Great Depression

What Caused the Great Depression?

The 1930’s was a devastating time in American history that affected the worldwide economy; characterized by utmost poverty, severe debt, and a failing economy. This period is known infamously as the Great Depression. In the early months of 1929 the New York Stock Exchange was hitting an all time high. On September 29th the stock market took a turn for the worse and crashed. The citizenry and government expected the economy to fix itself, but it only continued to worsen for 12 years; as part of one of the worst economically ruinous financial periods ever. Flashback to a time when American economy and society was on a complete downward spiral; this being jobs, stocks, standards of living, and even the number of people who were fed each night. This time in history was catastrophic in its time and affected the lives of many. The Great Depression was caused by credit debt, the wealth gap, and the sock market.

In the years leading up to the stock market crash people began buying items on credit; this means they pay an initial amount of money and pay the rest later based on credit. This was a great system until many were buying items on credit that they didn’t have money to pay for, this led to consumer debt. Consumer spending was outrageous in this time, but many didn’t have the income to uphold this type of spending; like said by Leuchtenburg, “…consumers bought goods on installment at a rate faster than their income was expanding,” (Document 6). Many people accumulated a large debt due to buying on credit with money they didn’t have, similarly stated by Davis, “…the bill will be all the larger when it finally has to be faced,” (Document 4). Consumer debt took years to pay off and was just another reason for lack of money during this time.

We can also thank the stock market for yet another cause of the Great Depression. Stock buyers began buying stocks without knowing if the company was profitable, this was done with hopes of...