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Causes and Effects of the Great Depression

The Great Depression started on October 29th 1929, otherwise known as Black Tuesday. It sent the world spiraling down in the world’s largest economic crash ever.

The Great Depression was a time in America when the stock market crashed and banks closed. Lots of people’s life savings were lost and they were left without money or a job. People stood in line for hours just for a little bit of soup to feed their families. what caused all this to happen? That question will be answered in the next few paragraphs.

The first cause of the Great Depression was trickle down economics. The idea of trickle down economics is that the more money you give rich people the more money poor people will get because the rich person would start a company with the money and hire poor people to work it. What happened instead was that rich people either kept all the money given to them or they started a company and instead bought a bunch of machines to work instead of people. Either way, it didn’t work.

The second cause of the Great Depression was stock market speculation. This was when everyone wanted to have a part of the stock market but didn’t have the money to. So they borrowed the money and bought overpriced stocks that were really worth nothing so they lost all their money. The people who lent them the money also lost because nobody could pay them back. This made lots of people lose everything they had to pay back for their borrowed money.

The third cause of the Great Depression was bank closings. When all the investors couldn’t pay the banks back they just had no money left and everyone lost all of their money they had in the bank. Everybody came to get their money though and when the banks didn’t have it the people started breaking up the bank’s windows and furniture. I think that over a thousand banks closed in a single year during the Great Depression.

The fourth cause of the great depression was overproduction. Companies could make things really fast now, so fast that there were too many products and not enough people to buy them. The companies kept on making a product that nobody was buying so they were still spending money on materials but not receiving any money from the product.

The first effect of the Great Depression was unemployment. With all of the factories closing from overproduction lots of people lost their jobs. Thirty-four million Americans had no source of income in 1933.

The second effect of the Great Depression was massive poverty. All of the 34 million people with no source of income were now really poor and living off of soup kitchens. That was more than 60% of people officially considered living in poverty.

The third effect of the Great Depression was homelessness. Two million people with no home basically walked around looking for work. Towns put up signs telling these people to go away. These homeless people weren’t just adults, they were also children.

The fourth effect of the great depression was devastation on American Farms. Farmers weren’t making any money on their crops, instead they were losing more than $1.50 per acre of land they planted. Plus there were giant dust storms that destroyed lots of fields leaving the farmers with no money at all and lots of them ended up losing their farms.

The Great Depression ended during World War II. What ended it was all the new jobs created for building weapons and all the soldiers that needed to go and fight. At the end of World War II the United States was the most powerful country in the world because we had nuclear missiles.

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User Comments
  1. Kelvin

    On November 10, 2008 at 7:50 pm

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