Facts About Causes Of The Great Depression




Here are some interesting facts about the causes of the Great Depression:

•In the 1920s, sometimes referred to as “The Roaring Twenties,” there was a false sense of prosperity on the part of Americans.  Approximately 60% of the population lived at a poverty level (earning less than $2,000 per year), yet credit was available, and people were using it. People were buying cars and radios on installment credit, and the automobile industry was the leading industry in the country.

•Speculation in the stock market was one of the causes of the Great Depression, yet only about 1% of the American population were investors at the time of the stock market crash in October 1929.

•In the stock market, people were buying stocks on margin (which is the same as borrowing money to pay for stocks), which sent the Dow Jones from 191 points at the beginning of 1928 to 381 points by September 1929 (shortly before Black Tuesday).




•In 1929, approximately 200 corporations owned more than 50% of all American industry.

•In 1929, approximately 1% of Americans controlled 40% of the wealth of the company.

Banks were failing long before the stock market crashed in 1929. In fact, during the 1920s, 600 banks failed each year, on average.

•The Great Depression was caused by fearlessness and fearfulness, overconfidence and loss of confidence. The booms of the 1920s led to borrowing, speculation, and rampant spending. Once things started to go downhill (primarily throughout 1929), they spiraled quickly. The stock market crash of October 1929 caused a run on the banks, which led to a decrease in spending, which led to unemployment, which caused more of a run on banks and more decreases in spending.

•From 1929 to 1933, the United States’ Gross National Product (GNP) dropped by 33%.

•Drought conditions in 1932, 1933, 1934, and 1935 led to Dust Bowl conditions during the Great Depression. A large part of America’s farmlands lost their topsoil due to extreme winds, which rendered millions of acres useless.