Economic Recession - Great Depression Causes

We often hear many of the effects of the Great Depression but what about the causes of it? Many people aren’t very familiar with what lead to all of it. There is often a misconception that all was well and then on October 29, 1929 it all fell apart when they stock market crashed. While this is a very remarkable event in the Great Depression, it isn’t what caused it. In fact, there were plenty of things going on that let to it in the couple of years prior.

The economic problems that were going on all over the world were one of the many causes of the Great Depression. People were dealing with owing money but not being able to secure a job to pay for their ongoing expenses. The losses seemed to be everywhere and people weren’t able to spend enough at the various stores out there to keep them open. They were desperate to get what they could at the lowest possible price. Only essential items were purchased.

No one could really afford to by anything extra, so the factories were shutting down. As a result more and more people were out of work. We tend to forget that all of the businesses out there that make money depend on money coming in and going out from various resources. The amount of debt that individuals and businesses had were very high and the income they had to take care of them was often next to nothing.

There were issues with the climate too that couldn’t be controlled. Severe drought in places continued to result in crops not growing. The fact that many areas were dealing with insufficient soil due to erosion wasn’t helping either. The yield from the crops was becoming very low.

Wide spread panic also contributed to the Great Depression. People lost their faith in the economics of their country. They no longer placed their money that they did have in the bank. They held onto the supplies they had and changed their way of using them. They carefully planned so they could stretch them out as far as they could. This meant they weren’t keeping the cycle of buying and paying for goods consistent.