Top 10 Biggest Causes of the Great Depression

Archived
The Great Depression was an era in the world of a massive economic depression. There were many factors coming into play that eventually led to the Depression, with some having a greater effect than others. How did the booming 20s become the crumbling 30s? Let’s explore the series of things that led up to this era, and which factors had the overall greatest effects.

The Top Ten

1 Banking was incredibly weak

Yeah people panicked when the market crashed and people started to pull money and the banks couldn't handle leading even more collapses and our economy fell. On point list. - 2storm

Most banks were privately owned, and a lot of them didn’t have the assets to keep them together. People were rushing to pull money out in panic that they might lose it, and banks didn’t have enough to supply them with the money they needed. This resulted in a large wave of banks collapsing. - Archived

2 The new credit system freezing up

Just about everyone was on credit. This relatively new system seemed to work magic for those who were trying it out. However, because banks didn’t have the assets available for people on credit, everything completely froze, and no money was circulating. - Archived

3 Unemployment rates increasing greatly

Businesses were collapsing by the minute, and that’s in part due to their inability to keep workers with them. Unable to pay them due to banks collapsing, workers were laid off rapidly. This left the unemployment rates to skyrocket higher than the US would’ve ever seen at that point; more than the UK, France, and Germany combined. - Archived

4 Failure in agriculture

There were rising debts in agricultural fields due to the overspending of new mechanics. In combination with low prices, this meant people in said field would need to stock up on an overload of goods to maintain financial stability. Unfortunately most farms could not make any profits during this time. - Archived

5 Currency deflation

Price levels decreased, and with businesses falling into debt, there was less they could do to save themselves. With the money supplies decreasing and the products increasing, this led to prices dropping fast. - Archived

6 The US gold standard

The US was facing massive deflation, something which no economy wants at all. America wasn’t buying as many imported goods, and foreign gold outflows devalued international currency. Other countries were suffering as well from this imbalance of trade, and the depression spread. - Archived

7 International debts were on the rise

Numerous nations, such as Germany, were facing debts and reparations coming from the Great War. When the reparations couldn’t be paid off, the economies of other nations involved also fell. - Archived

8 The US's placement of high tariffs on traded goods

International trade was failing mostly due to the high tariffs the US was placing. It was from there that little help could come forward due to potential buyers abandoning the industries, bringing international trade to an even worse state. - Archived

9 The stock market crash of 1929

There are people that like to say that this sole factor was what led to the Depression, but that’s obviously not true. It did play a factor for those who invested most in stocks than other investments, as when prices were dropping, people were pulling out quickly, eventually leading to the entire market to crash. - Archived

10 Lack of governmental interference

Yep Hoover simply didn't give a crap. A lot of my family that lived in the depression hated Hoover. - 2storm

While Hoover was president, if there were actions to be taken to stop the Depression from getting worse, the government was hesitant to do it, or if they did do it, the result was not enough. Hoover believed the Depression would mostly be better off solving itself, and thus nothing was really done to save the economy. FDR, however, had a more open mind to trying to solve the Depression with the New Deal, but that’s a topic for another time. - Archived

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