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Causes of The Great Depression


The Great Depression (1929-39) was the deepest and longest-lasting economic downturn in the history of the Western industrialized world. In the United States, the Great Depression began soon after the stock market crash of 1929, which sent Wall Street into a panic and wiped out millions of investors. Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and rising levels of unemployment as failing companies laid off workers. By 1933, when the Great Depression reached its nadir as some 13 to 15 million Americans were unemployed (25% of the workforce) and nearly half of the country’s banks (>9000) had failed.

While it is agreed upon that the stock market crash of 1929 was the “spark” that ushered in the Great Depression, historians have debated the root causes for decades.


Your job is to discover the actual causes of the worst economic collapse in our nation’s history so that they can not only be understood but avoided.


Part I:

You will answer each question by reading from the link/s provided for each. If you feel that you need further information for understanding, use a metasearch such as Dogpile or Unabot, or a search engine/directory such as Google or Bing. Be sure to answer each in Google Classroom, in complete sentences.

  1. Explain what was meant by unequal distribution of income.
  2. Explain what was meant by the idea of easy credit.
  3. Explain the quandary caused by mechanization.
  4. Describe the concept of overproduction/underconsumption.
  5. Explain how buying on margin and speculation aided in the stock market crash in October of 1929.
  6. Describe the role of raising tariffs (e.g. the Smoot-Hawley Tariff Act) in damaging the economy.
  7. Describe how unpaid war debts negatively impacted our economy.
  8. Explain the failure of the Federal Reserve to lower interest rates and increase the money supply at the onset of the Great Depression.

Part II:

Choose 3 causes (from the above eight) that are debated by historians and explain why those are the chief causes of the Great Depression. Be sure not to reiterate word for word what has already been answered in Part I.

* Due