What caused the great depression?

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What caused the great depression?

Introduction

During the 1920’s in America, people tried their hardest to reach prosperity, they believed in having a nice house, a good job and money for food, but also there were dreams of buying consumer goods.

During the economic boom, many people started investing in the stock market, and many earned a lot of money this way. It soon became very successful and lots of people started joining the stock exchange.

Although this all took place, there still was a lot of suffering taking place, namely farmers producing surplus supplies of crops and also the problem of poverty. Soon, the whole stock market broke down and therefore the great depression began.

In this essay, I will explain what factors caused the great depression in detail and come to a conclusion about this and also which factor was most important. The main factors were use of speculation in the stock market, Trade problems, farming problems and Poverty.

Answer

The great depression was started by many factors, some long tern and some short term. These factors are illustrated below

Firstly there was the factor of Poverty, where there was an unequal distribution of money to different people. The most rich people in America got most of the money in America, they got over one third of the personal income. The poor 42% got not even one tenth of the income. So as the wealthy got wealthier, the poor in the country just got poorer. Companies were taking money from the economy, but not rewarding it to their workers, but spending it.    

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The market soon became a little bankrupt because there was a small market for luxury goods such as radios, cars, and vacuum cleaners, mostly because of all of the poor not in America. 60% of Americans earned less than $2000, the minimum wage for the bare necessities of life.

When the market started losing money and got fewer buyers, the companies were forced to reduce production and by doing this they had to lay off some of their workers causing unemployment

There was also the factor of farming in the United States. Farmers were encouraged to produce a ...

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