The Main Causes of the Great Depression

The Great Depression was the worst economic slump ever in U.S history, and one which spread to virtually al of the industrialized world.

The main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920’s, and the extnsive stock market speculation that took place during the latter part that same decade.

“We still pray to be given each day our daily bread. Yet there is too much bread, too much wheat and corn, meat and oil and almost every other commodity required by man for his subsistence and material happiness. We are not able to purchase the abundance that modern methods of agriculture, mining and manufacturing make available in such bountiful quantities“

"Current History"- 1932

Through such a period of imbalance, the U.S. came to rely upon two things in order for the economy to remain on an even keel:

Credit sales

Luxury spending and investment from the rich

The prosperity of the 1920 was not shared among industries evenly. In fact, most of the industries that were prospering in the 1920 were in some way linked to the automotive industry or to the radio industry

The economy is reliant upon those industries to expand and grow and invest in order to prosper. If those two industries, the automotive and radio industries, were to slow down or stop, so would the entire economy.

On Black Tuesday the market had fallen 13% and an unprecedented 16.4 million shares changed hands.

the rich stopped spending on luxury items

the middle-class and poor stopped buyng with installment credit

Industrial production fell by more than 9%