Reasons for The Great Depression?

Question

What were all the reasons for the great depression????

If you can please be detailed

Thanks!!

Answer 1

- "Margin buying" - people would take out a loan, buy a bunch of stocks, and then repay the loan. When prices dropped, they had no means to repay this money.



- Lenders had no way to enforce payment of loans because of the volume of defaults.



- Inflated prices: stock value soared because of artificial inflation. When these prices dropped and became realistic, people lost all the money they had invested.



- It hurt the common citizens. Many citizens were now able to invest their money in the stock market. Too many didn't see the dangers, and they invested their life savings and retirement money. When prices dropped, this money disappeared.



- Lack of market. When everyone lost their money, they stopped buying consumer items. This forced companies to lay off employees, and stop using manufacturing products. This killed the economy, which could usually help get out of a depression (as we see in the current day).



- Droughts. Midwest droughts meant farms lost crops and were unable to repay loans.



- Lack of an FDIC. If a bank failed, you lost your money. If you saw your neighbor run to the bank and withdraw his money, you did so too out of fear of losing it. The investment ventures of banks failed, and they lost the money of many customers. The banks failed, and there was no federal program such as the FDIC to protect customers.



These are all the major reasons. Essentially, people trusted risky investments, and were not diverse in their investments. This made a chain of events inevitable to bring the system down. It wasn't until WWII when the US needed massive military gear (tanks, cars, guns, ammo, clothing, boats, etc.) that we finally had the economic stimulus to bring America back. The first 100 days of FDR's presidency were invaluable, as well. He closed banks, started the WPA and CCC, and instituted numerous programs to help those hurt and to prevent such catastrophes in the future.



Good luck; hopes this helps!!

Answer 2

about 5 years ago, I started to fall into a really depressive episode. At first I thought it was only because I had a bad break from a relationship but the feelings wouldn't go away even after I got a new girlfriend. It was wrecking my life until a point where it was seriously affecting my work and personal life.



She was very worried but at the same time couldn't understand why I was still sad and thought that I still couldn't let go of my previous relationship. Being the wonderful person that she is, she put aside her feelings and suggested I go for psychiatric evaluation. Many months later and even more anti-depressants, I was not coming close to being better at all.



After doing some research online, I found out the real cause as you described it really makes a lot of sense and purchased this program. The results were simply astonishing. I read this book over three times and put all words in action. Using this method, I've kept my depression at bay ever since. Up to date I'm still living happily with my girlfriend.



Depression Free Method?

Answer 3

1. large reparations against Germany were unable to be paid back to England and France due to bankruptcy and England and france's economies suffer because they could not pay for goods to the US and hurting our economy as well

2. Overindulgent unwitting speculation on the stock market by people who did not know what they were doing and when trouble came they panicked sending the market into a free fall. There were not the stop gaps that there is today as was not there in 1929

3. The economy was doing too great on paper and not in practice as profits soared while at times production did not.

4. The Republican party did not put a restriction on certain business practices which might have taking some of the edge off the magnitude of the depression .

Answer 4

overproduction - people were overproducing more goods and thought the more they produced the richer they were. but, wrong .. when demand started going down, they would suffer economically, which could ultimately bring a closure to their company/business. When there businesses failed, the loans and other money invested in it by banks would be lost and there would be no way of retrieving it. Banks would have failures because of this hurting american economics.



Stock market -- people heavily bough on margin to get rich overnight and over invested. people lost money when they could not pay back loans that they had invested on it.



Europe -- The US wasn't the only ones suffering a depressiong. after ww1, the countries involved (who were main traders with the us) were in debt and depression as well, and had reparations to pay. they didn't buy american goods because they were too exspensive/unneeded.



Dust Bowls for farmers, made farming almost impossible.

Answer 5

Causes of the Great Depression

1. False Prosperity

overdependence on mass production, consumer spending, advertising, welfare capitalism, high tariff, "invisible hand"

automobile was the leading industry

chemicals, appliances, radio, aviation, chain stores

overproduction in textiles, farming, autos

real wages increased only 11%

60% population less than $2000 poverty minimum

top 5% earned 33% income - spending by the rich essential

Andrew Mellon cut taxes

2. Speculation

Fed loaned at 3.5%, gold inflow 1927, Great Bull Market 1928

broker loans on call rose from $3.5b in 1927 to $8.5b in 1929

Goldman Sachs investment trusts, 50% margin trading at 5% interest

only 1.5m of 120m population were investors

pooling tactic of "anglers" - John J. Raskob

Charles Mitchell of National City Bank: "I know of nothing fundamentally wrong with the stock market." (Oct. 21, 1929)

Joe Kennedy: "Only a fool holds out for the top dollar" (sold after RKO merger in October 1928)

3. Stock Market Crash

Sep. 3 Dow high of 381

Sep. 6 Babson break - market became erratic

Sep. 20 - collapse of Hatry in Britain

Oct. 23 - J.P. Morgan buys to stop price decline

Oct. 24 - panic selling began - 12.8m shares

Oct. 29 - "Black Tuesday" - 16.4m shares

prices decline to Dow low 41.22 on July 8, 1932

4. Banking Crisis

deposits withdrawn, deflation

9000 banks fail in 1930, 1932 waves

Austria's bank failed May 1931

5. Unemployment

ripple effect as leading factories close

rose to 25-35% of total labor force, 80% in Toledo

farm income declined 60%; 1/3 lost land

6. Trade Collapse

foreign countries retaliate with high tariffs

Weimar Republic unable to pay reparations or U.S. banks loans

U.S. had been creditor with $638m annual surplus

7. Republican Policy

"The Ordeal of Herbert Hoover"

laissez faire, balanced budget, trickle down, voluntarism

no use of monetary or fiscal policies

Agricultural Marketing Act, Hawley-Smoot tariff, RFC of Jesse Jones

Three Little Pigs

Answer 6

1. Stock Market Crash of 1929

2. Bank Failures

3. Reduction in Purchasing Across the Board

4. American Economic Policy with Europe

5. Drought Conditions



source:

http://americanhistory.about.com/od/grea...

Answer 7

Stock market crashing left a large portion of the population out of work. A drought set in and turned the middle of the country into the "dustbowl".

Answer 8

One reason was that the wealth distribution was greatly unequal. That caused an unstable economy.



Another reason was extensive stock market speculation that also took place. It kept the stock market artificially high, but eventually led to market crashes. These crashes, combined with the unequal distribution of wealth caused america to capsize.

Answer 9

huh..? I didn't hear of any great depression..?

Answer 10

tension,masterbation,jealousy,alone-ness