Many factors played a role in bringing about the depression; however, the main
cause for the Great Depression was the combination of the greatly unequal distribution of
wealth, banking problem, industrial power houses and agricultural depression which
ultimately lead to the infamous Stock Market Crash of 1929. The "roaring twenties" was
an era when our country prospered greatly. The rapid increase in industrialization was
fueling growth in the economy, and technology improvements had the leading
economists living that the uprise would continue. During this boom period, wages
increased along with consumer spending and stock prices began to rise as well. Billions
of dollars were invested in the stock market as people began speculation on the rising
stock prices and buying on margin.
On Thursday, October 24, 1929, the bottom began to fall out. Prices dropped
continually as more and more investors tried to sell their holdings. By the end of the day,
the New York Stock Exchange had lost four billion dollars, and it took the exchange
clerks until five o'clock in the morning the next day to clear all the transactions (Hicks 9)
Following Monday the realization of what had happened began to sink in, and a
full-blown panic set in. Thousands of investors-- many of them ordinary working people,
not serious "players -- were financially ruined. by the end of the year stock values had
dropped by fifteen billion dollars (McElvaine 45).
Many of the banks which had speculated heavily with their deposits were wiped
out by the falling prices, and these bank failures sparked run on the banking system.
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