Top 10 Biggest Causes of the Great Depression

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

Most banks were privately owned, and many didn't have the assets to stay afloat. People rushed to withdraw their money, fearing they might lose it, and banks didn't have enough to fulfill those demands. This led to a large wave of bank collapses.

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

2 The new credit system freezing up

Almost everyone was on credit, and this relatively new system appeared magical to its users. However, because banks lacked the assets to cover their credit obligations, everything froze, and money stopped circulating.

3 Unemployment rates increasing greatly

Businesses were collapsing rapidly, in part due to their inability to retain workers. Unable to pay them due to the collapsing banks, workers were laid off swiftly. This left unemployment rates skyrocketing to levels the U.S. had never seen, higher than the UK, France, and Germany combined.

4 Failure in agriculture

There were rising debts in agriculture due to the overspending on new machinery. Combined with low prices, this meant that those in this field had to stock up on excess goods to maintain financial stability. Unfortunately, most farms couldn't make a profit during this time.

5 Currency deflation

Price levels dropped, and with businesses drowning in debt, there was little they could do to save themselves. Decreasing money supplies and increasing products led to a rapid fall in prices.

6 The US gold standard

The U.S. was facing massive deflation, which is detrimental to any economy. America wasn't buying many imported goods, and foreign gold outflows devalued international currency. Other countries also suffered from this trade imbalance, which worsened the global depression.

7 International debts were on the rise

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

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

International trade was faltering primarily due to the high tariffs imposed by the U.S. Because of this, potential buyers abandoned the industries, further worsening the state of global trade.

9 The stock market crash of 1929

Some people like to say that this sole factor led to the Depression, but that's obviously not true. It played a role for those who invested primarily in stocks. As prices dropped, people pulled out quickly, eventually causing the entire market to crash.

10 Lack of governmental interference

While Hoover was president, if there were actions to be taken to stop the Depression from worsening, the government was hesitant to act. If they did take action, it wasn't enough. Hoover believed the Depression would mostly resolve itself, so nothing significant was done to save the economy. FDR, however, had a more open mind about solving the Depression with the New Deal, but that's a topic for another time.

Yep, Hoover simply didn't give a crap. A lot of my family who lived through the Depression hated Hoover.

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