what r the 3 main causes of the great depression?

Question

i cant figure it out i know one is the stock market but i dont know the other 2. please help

Answer 1

One reason was a major draught (sometimes called the "dust bowl") which caused produce to cost a lot more and made many farmers poorer becasue they had no crops to sell.

Another reason was the lack of distribution of the wealth. The rich were very rich, and the poor were very poor.

another was a lack of federal safeguards for banks. when the stock market crashed, many people took out all their money and the major financial institutions failed.

here's a quote from one source:
"The U.S. economy was also reliant upon luxury spending and investment from the rich to stay afloat during the 1920's. The significant problem with this reliance was that luxury spending and investment were based on the wealthy's confidence in the U.S. economy. If conditions were to take a downturn (as they did with the market crashed in fall and winter 1929), this spending and investment would slow to a halt. While savings and investment are important for an economy to stay balanced, at excessive levels they are not good."

Answer 2

Well, the stock market crash is the "cover" use to explain the Great Depression, but the crash was a result of Britain returning to the gold-standard while they were facing inflationary pressures. The World money supply inflated during this time, which probably triggered the event.

Here are some other problems.

The failure of:

1. State Banks - Non-Members to the Central Bank. Here the Central Banks are blamed, but if you look at the situation, the Central Banks were blind to what non-member banks held for reserves. This thought process stems all the way back to Hamilton vs. Jefferson. Those who followed Jefferson were still blind on the importance of a Central Bank. Hence, why the Central Banks were blind at the time and didn't respond correctly. (I think this thought process still exists today).

2. The Central Bank began to tighten the money supply in 1928 - Unfortunately, they didn't have all the necessary information and failed to respond correctly to the situation.

3. The major reason - back to the Gold Standard. This created a shock wave across the World. Countries that abandoned the gold standard seemed to recover more quickly than those countries that didn't.

Dig deeper into 1 & 2 by reading about Hamilton and Jefferson. There is a reason Jefferson had to resort to Hamilton's policies to make his presidency successful. Though, Jefferson didn't take Hamilton's advice on trade and ended up getting the White House burned to the ground.

Of course, France. The need to strip Germany of every last raw material and DM for repayment of WWI helped contribute to this issue, as well as creating a Monster.

Answer 3

I was alive in the Great Depression (and it deserves caps!) I know, that makes me an old lady but hopefully wiser than when I was younger.

You are correct that stock market speculation was one of the causes. Regulations have since changed but at the time people could buy "futures" by paying a small portion of the worth of the actual stock with the expectation that they could then sell the stock for far more than it was worth when they bought it. This worked very well as long as the stock market continued its dizzingly rise upward but it left the speculators broke when the market crashed.

Another cause was the huge disparity in wealth between the rich and the poor. In 1929 the income of the top 0.1% was equal to all the income earned by the bottom 42%! This was due primarily to the increase in manufacturing. Since most people were farmers and had virtually no disposable income, the economy became extremely unstable.

A third cause was that European nations were poor and struggling as a result of World War I. Many Americans did not realize that the economy had become global and European woes would spill over to the U.S. so the government erected high trade barriers. As a result, we exported far more goods than we imported and this artificial imbalance in the economy was bound to help bring about a global crash.

Well, you could find any number of economists who would give you a slightly different list of three, but these are certainly among the most important reasons.

Answer 4

There was a madness in the 1920's with people investing in the stock market and making huge profits. The market just kept going up. People thought it would never go down so people were borrowing money to invest in the stock market and buying stocks that had no intrinsic value. Also, people speculating buying stocks on margin and shorting stocks when they could not afford to pay up when their stocks went down in value or they had to cover their shorts.

Then there was a run on the banks because a lot of bankers had invested their depositors money in the stock market and lost their money. When people found out they tried to get their money out but there was no money. Even the Federal Reserve Banks had not cash

Banks were shut down for days and no one could get at their money.

This led to a lot of new laws: Federal Deposit Insurance and banks cannot be closed more than two days.

As if all this was not enough we also had the Dust Bowl to contend with because farmers had not planted their crops in rotation and had eroded the soil; which blew away in dust.

There was a chain reaction with everything falling down around like dominoes. No demand, no money to buy things; pretty soon everyone was hurting.

Many people went broke and never recovered.

Answer 5

These things all went together
1. The stock market crash.
2. Drought in the countries food producing great plains.
3. Industry overproduction

We overproduced equipment and supplies to go into World War One, causing us to drop into a deficit.
Everyone was living large and above their means, on credit.
There was a great drought in the midwest and south, our food producing areas.
Everyone pulled their money out of the market all at once, leaving the majority of people with nothing because of the deficit.
No food, no money, Great Depression

Hope this helps

Answer 6

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Answer 7

Many economists at the time argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries dependent on foreign trade.

The vast economic cost of World War I weakened the ability of the world to respond to a major crisis.

Answer 8

http://en.wikipedia.org/wiki/Great_Depression

The vast economic cost of World War I weakened the ability of the world to respond to a major crisis.

The prosperity of the 1920s was unevenly distributed among the various parts of the American economy

the tariff and war-debt policies of the Republican administrations of the 1920s had cut down the foreign market for American goods

easy-money policies led to an inordinate expansion of credit and installment buying and fantastic speculation in the stock market

Answer 9

3 Causes of Depression

1) Psychological Determinants:

Reaction to loss (By death, breakup, financial)
Periods of transition
Self anger, guilt enacted

2) Biological factors:

Menstruation
The first few weeks following child birth
Male climateric

3) Biochemical factors:

Hormonal level change
Metabolism
Dietary determinants

Answer 10

Economy
Inflation