To what extent did stock market crash in 1929 cause the Great Depression?

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saintfester | Middle School Teacher | (Level 3) Associate Educator

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The Stock Market Crash of 1929 signaled the beginning of the Great Depression and definitely made the eventual symptoms of the depression worse, so saying in helped cause the depression is not inaccurate.

The psychological effects of the crash had the most to do with the eventual unemployment and lack of capital investment and development during this period. Businesses became less inclined to make investments in new projects or new expansions, crippling economic growth following the crash and extending unemployment. This uncertainty of business expansion led to uncertainty about job prospects, and American workers and civilians consumed less, leading to a decline in consumer rates. These factors caused serious issues that together have been known as the Great Depression. These issues included bankruptcies, contraction of credit, business closures, worker firings, bank failures and a decline in the money supply.

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