There are many plausible causes of the Great Depression. The biggest misconception is that the stock market crash of 1929 was the cause of the Great Depression, but in fact, there were bigger problems within the United States economy before the Great Crash.

One of the biggest problems of the economy was the Lack of Diversification. The United States economy was too heavily based upon Henry Ford's Model-T car. The mass consumption of consumer goods kept the economy relatively good throughout the 1920's. The fundamental problem was that prosperity for the U.S. economy would only continue if the demand for consumer goods grew as f

Finally, the last cause of the depression was buying on margin. Many Americans believed that investing in the stock market was a great way to get rich. America came up with a new innovation, "credit", in the 1920's. This is where people would "buy now, pay later." The dilemma was that Investors would only pay a small part of the stock that they bought and borrow the rest. This meant that they would gamble and hope prices would rise so to make a profit and pay off their loan. This all ended on Tuesday, October 29, 1929, best known as the day the stock market crashed. On October 29, stock prices plummeted to a record low, and left Americans in a panic. The Great Crash declared the beginning of the Great Depression.

ast as the supply of consumer goods. "Production of industrial products, for the moment, had outrun consumer and investment demand for them. The most likely reason is that business concerns, in the characteristic enthusiasm of good times, misjudged the prospective increase in demand and acquired larger inventories than they later found they needed" (Galbraith p.179). In the late 1920's, the American consumers stopped buying and the economy started to suffer.

The programs from the New Deal, Americans started to accept government involvement and responsibility of the economy and its people. Union and racial minorities benefited from the New Deal, and became strong supporters of the Democratic Party, changing American politics for decades to come. Franklin Roosevelt's New Deal placed a much greater role for the federal government and created a feeling that the free market must be regulated in to order to avoid a Great Depression II!

Roosevelt was more successful in dealing with the Great depression because He dramatically changed the relationship between the American people and the government. He not only helped the American people fight off the depression but setup many important programs like Social Security. Hoover wanted the public to fix the depression. Hoover only made things worse by spreading the depression by cutting off international trade. He also raised taxes and refused to give aid to the unemployed. Roosevelt took action fast with his "Hundred Days" actions. He called Congress into a special session, during which F.D.R. called for swift action. No session of Congress had ever produced such a great deal of important legislation.

Another cause of the depression was the bad banking structure. The banking system was made up of large numbers of independent banks which made the system weak. After the stock market crash, many investors went to banks to demand their savings, but the banks did not have their money. This caused other Americans to panic and demand their savi

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Approximate Word count = 1845
Approximate Pages = 7 (250 words per page double spaced)