There are plenty of great depression articles and how the time period affected the life of everyone who lived during the time period
. But why did it happen? What caused of the great depression? That is a question that you are probably wondering. If you are here is a short list that can answer your questions.
1.Overinflated Prices
Prices of stocks increased in the 20s, as more and more people bought prices went higher and higher. This helped many common Americans to get rich; the only problem is that the stock's price could not be justified by the businesses that they were actually backed by.
A setback was going to occur at some point or another.
2.Too Much Leverage
One other reason for the stock market crash was that people where overleveraged. An investor could take a semi small account of $20,000 and then buy $200,000 worth of stocks with that money.
In short this meant people could lose their life savings in just a few days if the stock market turned against them. When the stock market crash occurred that is exactly what happened. As a result people pulled out their money from banks which led to bank failures. Massive bank failures led to less jobs and more panic which led to more people pulling their money out of banks.
It was an endless cycle that was slowly destroying the economy.
3.A World Getting Smaller
That is how the great depression affected the U.S., but one of the facts about the great depression was that it affected the entire world as well. How did a stock market crash in one country affect people across the world?
The answer, the world is a very small place. The economies of Europe depended on the U.S. to help them recover after the great war. When the U.S. collapsed so did they. When they collapsed so did the rest of the world that depended on on Europe and America to import their goods.