Great Depression

Essay by PaperNerd ContributorUniversity, Master's September 2001

download word file, 2 pages 1.0

The Great Depression The Great Depression is said to have been the worst economic slump ever in the history of the United States of America. The depression began in the year 1929 and ended roughly around 1939. There were many causes that brought about the depression in the United States. The wealthy people got wealthier, while the poor got poorer. This disparity of wealth created an unstable economy, which in turn ignited a depression. This depression brought about one of the worst stock market crashes ever.

There were many factors that caused this depression. Great improvements in productive methods during and after the war raised the output of industry beyond the purchasing capacity of U.S. farmers and wage earners. This increase in production was too much for the people. As the production of goods increased, consumer spending decreased. The cost of production decreased and wages slowly increased, but the cost of products stayed the same.

Thus, profit increased tremendously, which increased the gap between the rich and middle class. 60 % of the population earned less than the $2000 poverty minimum and the top 5% of the population earned 33% of the income. A factor that led to this depression was the crash of the stock market. People wanted to get rich fast and they believed that investing in stocks was the easiest way of doing so. So a person finds a company that is doing well and buys a share, a portion, of the company. A person must have money to buy that share, but if he does not have the money he borrows this money from the bank. This is called buying stocks on margin. After making money off the stock, that person must then pay back the bank. As that person sees the stock rise, he/she must...