What caused this great economic turn around from the prosperity of the 1920’s? There are many factors that played a role in causing the depression; however, the main causes of the depression were the unequal distribution of wealth, the extensive stock market speculation during the 1920’s, and the failure of the agricultural market. The misdistribution of wealth existed on many levels. Wealth was distributed unequally between the rich and middle-class, and between the United States and the European nations. This imbalance of wealth caused the economy to become unstable. The extreme speculation of the Stock Market kept stocks at artificially

Due to the misdistribution of wealth parts of the economy boomed with confidence and speculation in the Stock Market increased and stock prices soared out of control. The agricultural markets were already in ruin, but seemed to be carried by the confidence in the rest of the market. The inevitable finally happened and the market crashed. When the market crashed the country spiraled quickly into catastrophe and the Great Depression was born!

As the disparity in distribution of wealth continued investors in the Stock Market were over speculating the value of stocks being traded. This came about as the result of general optimism by investors who believed that the newly born Federal Reserve could stabilize the economy, and technological progress could guarantee rising living standards and redistribute the disparity in distribution of wealth. All of this led the price of stocks to soar, even though very few companies were posting any gains in revenues. As this continued the new Federal Reserve raised interest rates hoping to slow the Stock Market down and keep it from going over the edge. This act caused the inevitable to happen, the market to crash in October 1929.

As the United States prospered in the 1920’s Europe was struggling with the effects of World War I. During the war the U.S. Government lent its European allies vast amounts of money, so they could continue with the war effort. A lot of this money was in-turn used to

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