Explain the causes of the Great Depression.

Stock Market Crash of 1929 - On Thursday, October 24, the market plunged at the opening bell, causing a panic. Though investors managed to halt the slide, just five days later on "Black Tuesday" the market crashed, losing 12 percent of its value and wiping out $14 billion of investments. Two months later, stockholders had lost more than $40 billion dollars. Even though the stock market regained some of its losses by the end of 1930, the economy was devastated. America truly entered what is called the Great Depression. Bank Failures - The stock market crash rippled throughout the economy. Nearly 700 banks failed in waning months of 1929 and more than 3,000 collapsed in 1930. Federal deposit insurance was unheard of. Instead, when banks failed, people lost their money. Others panicked, causing bank runs as people desperately withdrew their money, forcing more banks to close. By the end of the decade, more than 9,000 banks had failed. Surviving institutions, unsure of the economic situation and concerned for their own survival, became unwilling to lend money. This exacerbated the situation, leading to less and less spending. Reduction in Purchasing Across the Board - With their investments worthless, their savings diminished or depleted, and credit tight to nonexistent, spending by consumers and companies alike ground to a standstill. As a result, workers were laid off en masse. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans; repossessions and evictions were commonplace. More and more inventory began to accumulate. The unemployment rate rose above 25 percent, which meant even less spending to help alleviate the economic situation. 0 read less