03/19/2019
SAMPLE ESSAY 2
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English:
March, 19th 2019
The Causes of Great Depression
Historians have documented that great depression was one of the tragic and unfortunate phenomena that shook not only the American society but the world at large. The great depression occurred in the late 1920s and lasted almost ten years. The period started on the Black Tuesday on October 29, 1929 and led to economic collapse, increased the unemployment rates, affected the markets, increased the cost of living and homelessness and caused inflation. Although studies have shown that many factors led to great depression, the major causes of great depression are Stock Market collapse and reduction of the purchasing power among the people.
The collapse of the stock market led to the Great Depression. The stock market collapse lasted four days and was marked with a decline in stock prices. It is documented to be the worst decline in American history. For instance, Dow Jones dropped by approximately 25 points, and it is further estimated that investors lost almost $396 billion. (Farmer, 619, 620) Also, scholars aver that the warning signs began way earlier and only crystallized on the material day. Studies argue that the stock market collapse began with the headline by the New York Times that sent the panic waves across the stock market on the topic of margin sellers. Also, a similar headline was featured by the Washington post further fueling the speculation and increasing the panic among the sellers leading to some investors withdrawing their money. Consequently, the stock market collapse was one of the major causes that led to great depression.
Secondly, the low purchasing power led to the great depression. The lower purchasing power by many people was as a result of the stock market crash, and there was general apprehension among the people that the issue would further escalate hence they stopped purchasing goods which complicated the situation further. (DiNunzio, 117) The producers and manufacturers reduced the number of products that they were producing which also caused unemployment. As many people continued to lose their jobs, it also affected their purchasing powers since they could not afford to buy goods in the market. It is estimated that the unemployment rate at that time was around 25 percent. (Arndt 10) Hence, low purchasing power is the main reason that led to great depression in the United States of America and the world.
In conclusion, therefore, although many causes led to great depression, the collapse of the stock market and the low purchasing power of the consumer were among the major factors that aggravated the situation. First, the failure of the stock market caused the investors to withdraw their capital, and it led to unemployment since many industries failed and also caused unemployment among the people. The second issue was the low purchasing power which meant that people had less money to buy goods and which led to low production. Further, the low production by the industries resulted in massive job losses among the people. Thus the great depression was mainly caused by these two issues.
Works Cited
Arndt, H. W. Economic Lessons of the 1930s. Routledge, 2014.
DiNunzio, Mario R. The Great Depression and New Deal: Documents Decoded. ABC-CLIO, 2014.
Farmer, Roger E. "The Stock Market Crash Really Did Cause the Great Recession." Oxford Bulletin of Economics and Statistics, vol. 77, no. 5, 2015, pp. 617-633.