What were five causes of the Great Depression?

Answer 1

5 causes of the Great Depression would be:

v Stock Market Crash of 1929

v Bank Failures

v Reduction in Purchasing Across the Board

v American Economic Policy with Europe and

v Drought Conditions.

Answer 2

There were several major causes of the Great Depression in the United States.

1. Unequal distribution of wealth. There was not a large middle class. While wages were rising for the majority of workers, they were not keeping pace with the increase in the cost of living or the wealth in the hands of the industrialists and others in the upper income classes.
2. There was over-speculation in the Stock Market, which was not regulated. Many Americans purchased stock on credit. This was known as margin buying.
3. Increased manufacturing and agricultural output, but wages that did not keep pace for the consumers to purchase all that was produced or grown. Hence, inventories increased and agricultural income remained low.
4. Buying on credit, known in the 1920s as installment buying. People purchased things like refrigerators on time, and did not have money to pay for the product in the future, when the bills became due.
5. Federal regulations on businesses also contributed to the cause. Especially favorable to the large corporations were the taxes laws which were written to encourage business expansion.
6. Banks were permitted to speculate in land and the stock market with little government regulation.
7. High tariffs and war debts helped spread the depression world wide.
8. The Stock Market Crash of 1929 signaled the beginning of the Great Depression.

Another Perspective

The Great Depression came from government regulation. In the 1920s The United States relaxed government regulation and reduced the size of the government. This created the greatest increase in wealth for the average person as well as the single most inventions and discoveries in one decade.

As the decade came to a close the government philosophy changed back to one of more regulation. First with Hoovers passing of the Smoot-Hawley Tariff which just about destroyed America's agricultural foreign trade.

Then came FDR's Agricultural Adjustment Act in 1933 which paid farmers not to grow crops, the plowing over of 10 million acres of cotton fields and slaughtered about 6 million piglets.

In 1935 these moves caused the United States to import millions of bails of cotton and millions of lbs of Bacon and ham. This of course caused a rise in products. The Market, Wall St., couldn't handle the drastic change due to Smoot-Hawley which help add in the collapse.

The government added more debt and price regulations which further hurt the business man and artificially raise the cost to the consumer. While the rest of the world was climbing out of their depressions the United States fell into their 'Great Depression.