The Economic Causes and Effects of the Great Depression

The Great Depression was one of the darkest periods in the history of the U.S. Understanding the causes behind it will help people avoid any similar developments in the future. Studying this matter closely will also ensure that the country’s economy becomes stronger.

The first bell that announced the approach of the Great Depression was the crash of the stock market in 1929. This incident is known as Black Tuesday, and the name is truly fitting, as it was indeed a black day for the economy as a whole. The impact of this financial disaster was so strong that the U.S. stock market was not able to fully recover even after a year of relentless work. This led the country directly into the Great Depression. The first victims of this devastating economic phenomenon were banks. Over nine thousand banks were closed. Millions of Americans lost their savings and were denied loans by the few banks that remained afloat.

The instability and anxiety caused by the crash of the stock market resulted in the reduction of people’s demands. The vast majority of Americans were simply unable to afford many things. The unemployment rate was growing extremely fast, and some poor individuals were left literally penniless and homeless. The horror of the situation was doubled by the simple fact that this could happen to anyone. Instead of looking for help from other countries, the U.S. government cut down on international trade and increased the taxes that European companies had to pay in order to sell their products in America. This measure attempted to fulfill a noble goal of supporting the local manufacturers by cutting down the public’s access to foreign products. Unfortunately, the idea backfired and only served to increase the tensions between Europe and America. The drop in international trade, as well as retaliation measures implemented by European countries, worsened the Great Depression and made solving this problem much more difficult.

Nature itself seemed to conspire against people, and hit the economy with a drought that caused another major economic disaster. This resulted in thousands of families from the Mississippi Valley to be forced out of their homes. People were literally left with nothing, and had no choice but to move to other states to look for a better future for themselves and their families.

The Great Depression was a tragedy that affected American society on many levels. It had such a profound effect on all areas of life because it was caused by a great variety of factors.

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