Entry 10: A Cause and Effect Essay

Causes of the Great Depression

Beginning in the United States, the Great Depression was a worldwide economic depression. According to data, it was the longest, deepest, and most widespread depression of its kind in the 20th century. It is said the Great Depression started on September 4th, 1929, through various factors. According to experts, the causes of the Great Depression was a stock market crash, bank failures, a reduction in purchasing, American economic policy in Europe, and drought conditions. Let us explore these causes in detail in the following paragraphs. 

Though the stock market of 1929 was crucial for the initiation of the Great Depression, it was not the only factor. According to Cumberland County Schools, “Two months after the original crash in October, stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression” (5 Causes of The Great Depression). Though the U.S. lost a massive amount of financial power through the stock market crash, bank failures also made a huge impact on the economy.

After the huge market crash, widespread bank failures happened. As the website “The Great Depression” states, “Economists can debate whether bank failures caused the Great Depression, or the Great Depression caused bank failures, but this much is undisputed: By 1933, 11,000 of the nation’s 25,000 banks had disappeared. Overnight, hundreds of thousands of customers began to withdraw their deposits. With no money to lend and loans going sour as businesses and farmers went belly up, the American banking crisis deepened” (“Bank Failures During The Great Depression”). President Franklin D. Roosevelt tried to tackle the Great Depression by creating a 3-day bank holiday, and from this action, 1,000 banks were saved (“Bank Failures During The Great Depression”).

From the stock market crash and bank failures, naturally purchasing power became less. According to Cumberland County Schools, “As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation” (5 Causes of The Great Depression). As you can see, it was like a chain reaction, with each loss creating an exponential effect. These effects even went abroad.

In 1930, the Smoot-Hawley Tariff was introduced to safeguard American companies. However, according to Cumberland County Schools, “This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation” (5 Causes of The Great Depression). Thus, even though the Tariff allowed companies to stay afloat, overall trade between the U.S. and other nations became increasingly less.

 

Not so much a direct cause of the Great Depression, but definitely a factor that worsened general conditions, was the Dust Bowl. As the website “The Great Depression” states, “A drought that lasted from 1930 to 1936, known as the Dust Bowl, aggravated the problems of the Great Depression. More than a million acres of farmland were rendered useless because of severe drought and years of overfarming, and hundreds of thousands of farmers joined the ranks of the unemployed” (“Causes of The Great Depression | Great Depression Facts Effects”). With agriculture being hit hard, it is no wonder the the Great Depression became even more dreadful.

Looking back, we can see that the Great Depression was caused by various factors, besides just the stock market crash of 1929. There was also bank failures, a reduction in purchasing power, a worsening American economic policy in Europe, and the Dust Bowl. All these causes combined made the Great Depression what it was: the most horrendous economic collapse of the 20th century. 

Works Cited

“5 Causes of The Great Depression.” Cumberland County Schools. http://www.cland.k12.ky.us/userfiles/13/Classes/441/5%20causes%20of%20the%20great%20depression.pdf?id=8459.

“Bank Failures During The Great Depression | Bank Failures 1929.” The Great Depression, thegreatdepressioncauses.com/great-depression/banks/.

“Causes of The Great Depression | Great Depression Facts Effects.” The Great Depression, thegreatdepressioncauses.com/causes/.

Essay Source: https://academichelp.net/samples/academics/essays/cause-effect/causes-of-the-great-depression.html

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