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Causes of the Great Depression

             The Great Depression was the severe economic crisis that began in 1929, that sent the United States into a frenzy. At the depth of the depression, about 1/3 of the available labor force was unemployed (16 million workers). The US stock market crashed in October of 1929, and lost 89.5% of its value. Deflation was affecting not only the US, but every economy in the world. Prices fell 25%, 30% and even 40% in France, Germany, UK and in the US from 1929 to 1933. It's undeniable that the Great Depression was one of the hardest trails the US has had to endure. Historians, politicians, government officials, economists, optimists, and pessimists have long argued over what the causes were of the Great Depression. This is an issue that will most likely be argued over until the end of time, but there are a few causes they have been able to agree upon.
             The crash of the stock market in 1929 marked the beginning of the Depression. The rapid increase in industrialization was fueling growth in the economy, and technology improvements had the leading economists believing that the up rise would continue. During this boom period, wages increased along with consumer spending, and stock prices began to rise as well. Billions of dollars were invested in the stock market as people began speculating on the rising stock prices and buying on a margin. The enormous amount of unsecured consumer debt created by this speculation left the stock market essentially off-balance. Many investors, caught up in the race to make a killing, invested their life savings, mortgaged their homes, and cashed in safer investments such as treasury bonds and bank accounts. As the prices continued to rise, some economic analysts began to warn of an impending correction, but the leading experts largely ignored them. Many banks, eager to increase their profits, began speculating dangerously with their investments as well. Finally, in October 1929, the buying craze began to dwindle, and was followed by an even wilder selling craze.

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