Cause And Effect Chart Of The Great Depression
The Roaring Twenties
The Great Depression of the 1930s was a period of economic hardship that lasted for nearly a decade. The causes of the Great Depression can be traced back to the period of the 1920s, known as the Roaring Twenties. This was a time of great prosperity and economic growth in America, and many people believed that it would continue indefinitely. However, the economic conditions that led to the Great Depression began to emerge during this time.
Stock Market Crash
The stock market crash of 1929 is often cited as the immediate cause of the Great Depression. On October 24, 1929, investors began to sell off their stocks in large numbers, causing a panic that led to a sharp decline in stock prices. This triggered a chain reaction of events that ultimately led to the collapse of the stock market and the onset of the Great Depression.
Bank Failures
The stock market crash led to a wave of bank failures as panicked investors withdrew their money from banks. Many banks had invested heavily in the stock market and were unable to meet the demands of their depositors. As a result, thousands of banks went out of business, wiping out the savings of millions of Americans.
Reduction in Purchasing Across the Board
As banks failed and people lost their savings, consumer confidence plummeted. People stopped buying goods and services, which led to a reduction in production and a rise in unemployment. This further worsened the economic conditions and led to a downward spiral that lasted for years.
Drought and Dust Bowl
In addition to the economic factors that contributed to the Great Depression, there were also environmental factors. A severe drought in the Midwest, coupled with poor farming practices, led to the Dust Bowl. This was a period of severe dust storms that caused widespread damage to crops and livestock. The Dust Bowl worsened the economic conditions in the Midwest and forced many farmers to leave their homes in search of work.
New Deal
In response to the Great Depression, President Franklin D. Roosevelt implemented the New Deal. This was a series of programs and policies designed to stimulate economic growth and provide relief to those who were suffering. The New Deal included programs such as the Civilian Conservation Corps, which provided jobs for young men, and the Social Security Act, which provided financial assistance to the elderly and disabled.
End of the Great Depression
The Great Depression ultimately came to an end in the late 1930s and early 1940s. The onset of World War II led to a surge in production and employment, which helped to stimulate the economy. The end of the Great Depression marked the beginning of a new era of economic growth and prosperity in America.