1 Answer | Add Yours
The overarching cause of the Great Depression was the concentration of too much of the nation's wealth in the hands of too few people.
The first symptom of this cause was a decline in consumer spending, triggered by falling farm revenue. The loss of farm revenue resulted from overproduction of crops in an effort to boost profit. The glut reduced agricultural prices and wiped out profit. The declining spending reduced the growth of Corporate profits. This revealed that most of the stock market growth of the Roaring 20s had been purely speculative. This revelation led to a panic sell-off in October 1929, and that destroyed the wealth of many middle-class investors. As corporations continued to lose profit and capital, they cut their primary cost: jobs. Cutting jobs only compounded problems further, as that reduced consumer incomes, and consequently reduced consumer spending hurting corporate bottom lines even more. Only companies that realized this chain of events survived.
The results of the Great Depression largely came from efforts to treat symptoms. Regulation of securities to stop panic sell-offs and securities fraud. The introduction of Government safety nets (e.g. social security) to protect those most vulnerable to lean periods, and subsidizing agriculture to discourage over-production.
We’ve answered 319,378 questions. We can answer yours, too.Ask a question