Causes of the Great Depression

Topic Summary:
Main causes of the Great Depression

      Although most people associate the Great Depression as a result of the Stock Market crash of 1929, many failed to realize that the depression was the result of many other contributing factors as well.   A stock market crash do not necessarily always result in a depression, in 1987 there was a crash that did not lead the total economic chaos like that in 1929.
During the era of the “Roaring Twenties” America went through a Cultural Revolution.   America was very prosperous and the people reflected in high spirits and gay times.   The nation turned inward after the war and away from foreign issues and concerns. The nation’s isolationism attitude also directly reflected the economic ideals of that time as well.   The nation’s new modern industry was able to mass-produce many different items and America was feeling independent on manufacturing as a whole.   But because of this another problem rose, prosperity could continue only if demand was made to grow as rapidly as supply. Accordingly, people had to be pushed to abandon traditional values as saving, postponing pleasures and purchases, and buying only what they needed. Advertising methods that had been developed to build support for World War I were now being used to get people to buy new products such as automobiles, radios and household appliances. The resulting mass consumption kept the economy going through most of the 1920s.   This whole time led to a sense of false prosperity.   The people thought that if they cold keep tariffs high with the Hawley-Smoot tariff, they could also keep out foreign competition and increase American manufacturing and trading on the homefront.   The idea was sell more American items to Americans and keep the prosperity with the U.S. borders.   With the American high tariffs, the other countries retaliated with tariffs just as high towards American goods.
At this time the income was being distributed very inproportionally.   The...