Causes and Results of The Great Depression

Men looking for work during the Great Depression

There were many reasons the Great Depression was sparked in the 1920s and 1930s. The weakness in the United State's economy also effected the economy of numerous other countries, especially Latin American countries, that their economies were dependent on the cheap export of international goods ("The Great Depression." para 2).

Here are some of the main events that sparked the Great Depression of the 1930s:

• Buying on Margin
• Buying on Credit
• Supply and Demand
• The Stock Market Crash
• Drought

Buying on Margin is something that was done to buy stocks. Many of the stock prices rose over night making the owners of these stocks rich at the end of the decade, some rich at the break of dawn the next day. Buying on margin was just an easy way to get stocks quick to try and make money. Many stock buyers would go to the bank and ask to take a loan out and buy stocks with that money, but when the stock market crashed, they were not able to pay the money back because the had lost all the money they had had before. Now, the bank doesn't have any money to stay open and starts to shut down. This is happening all across the country ("The Great Depression - Causes of the Depression." para 1)

Buying on credit is another reason the Great Depression was what it was in the 1930s. People that didn't have the money to buy something right then and there bought on credit. All credit is is not paying what you need to now and just paying it back in small portions. Many people bought things like washers, dryers, and dishwashers, on credit in the 1920s, but when the Stock Marker began to crash, they were not able to pay back the person or company they bought the item from. This is somewhat like buying on margin because in both situations, you didn't have to money to either buy stocks or buying something like a washer. This ended up the same way as did the buying on margin is the sense that people weren't able to pay back the money they owed, the people or companies had no money to keep going on and went out of business. This meant no money or work for people ("The Great Depression - Causes of the Depression." para 2).

Supply and Demand was another great reason that the Great Depression occurred. Supply and demand made a difference because of the farmers producing food and the factory producing food. Many of the average Americans had an average pay for the 1920s. While the price of food was high, the income still stayed the same, but for rural livers, they had even less than the urban livers. No one was buying the farm produced items because it was too expensive to buy. The farmers were trying to get more money faster, but ended up getting no money at all. This resulted in cutting workers from the farmer and these workers then had no money, which they couldn't buy from the factories and the factories didn't get money either so they had to lay off workers. This trend continued until the unemployment rate hit its highest mark ever ("The Great Depression - Causes of the Depression." para 3).

The Great Stock Marker Crash was probably the biggest reason the Great Depression occurred. The Stock Marker Crashed happened when the high stock market began to drop, but President Hoover said the economy and stock marker was fine, trading and selling went on as usual. Later on, the stock market began to drop quickly and people who were invested in the stock marker began to panic. They didn't know what to do and when the stock brokers asked for the investors to pay their debts they had, they couldn't and started to sell their stocks. This combo made the stock drop even more. No money being paid back and then no owners of stocks. The stocks dropped very quickly that year, despite the rapid selling of stocks ("The Great Depression - Causes of the Depression." para 4).

The final major reason of the Great Depression is Drought. The drought at this time was at the worst it has possibly ever been in the plain states. This was bad because of the fact that there were absolutely no crops being produced in this area of the United States because of the major lack of rain. There were migrant workers that traveled their way on Route 66 looking for jobs that they could make the minimum wage on just to stay alive. Many people didn't want them to work because they would be taking away from the farmers that had their farms destroyed by the Dust Bowl, which was cause of the drought ("The Great Depression - Causes of the Depression." para 5).

To conclude this section on the Great Depression, the economic hardship in the United States in the 1920s and 30s, also greatly effected the European countries that were in alliance with because the trade we had with them was almost completely cut of because of lack of material to trade ("The Great Depression." para 4). One of the countries that suffered greatest because of this was Germany. They had inflation of their currency, making it harder to exchange money for another currency and also making it harder to buy almost anything ("The Great Depression." para 3).