Total # of Words: 477
Potential Causes of the Great Depression
The Great Depression was a worldwide economic downturn that started in the year 1929, but its effects were fully felt until late 1930s. Although the unpleasant event centered in North America and Europe, its damaging effects were spread throughout the world. Those countries which were very industrialized were the ones affected the most, including USA, Germany, Europe, Canada, Australia and many more. Unemployment and homelessness flared beyond your imagination. You could almost smell the desperation of the situation.
There were many factors that played a major role in setting off the depression. In fact, scholars have yet agreed unanimously on the relative significance and causes of the Great Depression event. However, the possible causes of the Great Depression you can read on below are based on the account on the country's economy during those times when the Great Depression was on its peak,
Speculation in the year1920s has caused many people to buy stocks with money they have loaned. They used these stocks as collateral in buying more stocks. The stock market report was very unsteady. How could you expect the stock market to be stable, especially when you knew that it was based on borrowed money and false optimism? When time came that investors realized what really was going on in the stock market, they lost confidence and eventually the stock market collapsed together with them.
Short signed government economic policies were one of the causes of the Great Depression. Many politicians believed that business was the primary activity of the country. With that in mind, the government did not do anything in opposition to unwise investing. Congress passed high tariffs that gave protection to American industries, but not on farmers and international trade, who were badly affected.
The instability of the country's economy was one of the causes of the Great Depression. National wealth was not uniformly distributed. What happened was, most of the money fall in the hands of only a few families who may have saved or invested instead of spent their money on American products, resulting to overage in supply more than what is needed. Some people may have gained profit, while others did not. Farmers and workers were not making any income, so when the prices went up, most of the people could not afford anything. In other words, the irregularity of prosperity made the Great Depression event very hard to recover.
The business cycle had long been on its ups and downs, but if you look back and study the many possible causes of the Great Depression, you can say that there's no doubt the country would have to go through widespread hunger, poverty, unemployment, economic crisis, and who knows what else. Fortunately, we are no longer experiencing the same catastrophic events at present.