Causes of the Great Depression Outline

To what extent was the Wall Street Crash a cause of the Great Depression of 1929? Support your argument with specific examples.


The Wall Street Crash was the most important cause of the Great Depression of 1929, because of the chain effect it had on other sectors of the economy which all together combined to cause the economic depression.

main point one- Crash caused major domino effect which led to major problems with unemploiment, poverty, and failed banking systems.
- investors lose money
- causes buisnesses to lose profit; lay off workers
- laied off workers spend less money; buisnesses have to cut production
- lack of money among thosealready effected by economic problems cannot pay back lones; banks run out of money
- cannot give people back their money

main point two- boom of investors during this time means wall street crash effects large amount of people directly
- amount of stock owners grew from 4million in 1920 to 20million (1/6 of the American population at the time)in 1929
- 600,000 "speculators" buy stocks on money borrowed from a loan; cannot pay back lone when stocks don't rise as much as expected.
- banks loan $9million to "speculators" without regard to their ability to pay such a loan back
- once market shows sighs of decline 20 million investors all try to sell their stocks at the same time buy only the uber-rich can afford to buy.

main point three- there were other causes, but they were isolated and did not have a similar chain reaction to that of the stock market crash
- overfarming leads to the forclosure of many farms, but this mainly only effected the farming community, which was not as big a portion of the country at this time than it had been in previous generations
- new technologies made some older goods unnecessary, which hurt these industries, once again no chain reaction
- Tarrifs created on forgin goods hurt international trade (ex: 1930 Hawley-Smoot Tarrif