Why did great depression happened during 1930s??
The stock market crash in 1929 was due to people not investing in companies but speculating. The “on paper” value of the companies grew well beyond the actual worth of the shares. Another problem that grew out of this was the buying on margin. Brokers would sell stock to individuals at a percentage of its cost. When the stocks began to make a correction and people began to sell and pull their money out of the market the investors/speculators could not pay the brokers back. Thus the crash. To be totally on the up and up though… most people agree the true cause of the Great Depression was overproduction. The Stock Market crash had such a devastating effect on the economy and was such a dramatic point it is easy to focus on. Overproduction caused a reduction in jobs… which caused lost demand due to lack of money…. which caused a drop in production which caused a reduction in jobs… See the cycle? The economy was so weak at this point there was no way to pull out of a recession let
