Stock Market Crash: Catalyst of the Great Depression - Essay Sample

Paper Type:  Essay
Pages:  4
Wordcount:  935 Words
Date:  2023-01-26


The stock market crash was factor responsible for the occurrence of the Great Depression. The increase in the prices of stocks made stock purchasing the most comfortable means of making money. Many people spent most of their disposable income on buying stock. Others also mortgaged their homes to purchase stocks. Nonetheless, the sudden decline in stock prices caused panic among stockholders, forcing them to liquidate their holdings. This worsened the situation and made people panic more. Instability of financial institutions, especially banks contributed to the occurrence of the Great Depression. The volatility of banks made customers to do withdrawing in the form of cash, causing banks to collapse. Further, the order issued by the federal government requiring banks to remain closed until such a time when they are stable and sound lowered spending and investing in businesses as only a few banks could lend money. This, in turn, contributed to the Great Depression.

Trust banner

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

The massive debts that businesses experienced also contributed to the occurrence of the Great Depression. Reportedly, many companies secured huge debts by falsifying their assets. However, they were unable to pay were not able to repay on time due to stock market crash 1. International banking practices also contributed to the Great Depression. During the First World War, the US channelled funds to allied forces. Nonetheless, with the challenges in the stock market, the US investors stopped giving money to the European nations. However, given that the US was holding the global financial position when the stock market crashed, the economy of the world followed suite 1.

New Deal

The New Deal led to the formulation of the Emergency Banking Relief Bill that enabled the federal government to restructure banks, improve solvent institutions and shut down insolvent banks. To deal with the challenges of the Great Depression, the New Deal enacted the Federal Deposit Insurance Corporation to ensure the savings of the Americans in case banks fail in future. New Deal also led to the enactment of the Agricultural Adjustment Act that provided a more lasting impact for the Americans. This Act as stated by one entailed creation of a national framework of crop controls and offered financial incentives to farmers who would consent to lower production of some crops to deal with the oversaturation of the market and the resulting decline in prices 1. More importantly, the New Deal sought to eradicate challenges of the Great Depression by enacting the Reciprocal Trade Agreements Act that enabled the president to lower tariffs by 50% to form special arrangements with international countries.

Emergence of the Cold War

World War II led to civil war, internal strife, as well as, the decline in the foreign occupation, and performance of industries. Reportedly, the Soviet Union and the US provided solutions to various allies to countries where Civil War erupted 3. When the IMF and World Bank were established, the Soviet Union declined to join these institutions by arguing that the US was controlling these unions. 3 noted that differences in ideologies had a significant contribution to the Cold War tensions. The conflict between George Marshall and Stalin regarding the Marshal Plan and NATO was a competition trend.

Fears that emanated from the Cold War compelled the United States to increase the number of its troops and military budgets. Similarly, to remain competitive, the Soviet Union strengthened its military. Further, the US formulated a plan of Massive Retaliation to destroy the Soviet Union in case they manifested any aggressive move. This provided the US with authority to never withdraw or relent from any crisis even when it implies leading the country to intense war. Further, this made the CIA overthrow governments in developing worlds and install puppet leaders that could be manipulated easily by the United States. Following the commencement of the Cold War, the officials of the United States established that the conflict between the US and the Soviet was more of ideological and psychological since it was majorly economic and military. The said tension was increased further by the Kitchen Debate and the people to people campaign. Reportedly, the Soviet Union and the US were in frequent conflicts, and as the US amassed the nuclear weapons, the Soviet Union did the same. Afterwards, the race to occupy the moon became the cause of tension.

Changes That Occurred Due To Civil Rights

Eradication of segregation was one significant change that emerged because of the Civil Rights movement. Although the US was trying everything possible to gain control and influence across the globe, racism was widespread in the US, and international leaders received poor treatment due to their skin colour 4. This compelled the Supreme Court in the US to scrap off segregation, a situation that allowed American to broadcast this decision across the globe using various languages. These efforts, together with Woolworth's initiatives, eradicated segregation across the US.

Civil Rights movement also led to the implementation of the Civil Rights Act that encompassed the capability of the government to implement the law and formulate of the Equal Employment Opportunity Commission to examine and deal with issues of employment discrimination. Therefore, through cultural changes and legislation, equality was achieved.


Gaddis, John Lewis. "Toward the post-Cold War world." Foreign Affairs, vol. 70, no.2 (1991): pp. 102-122.

McAdam, Doug, and Sidney Tarrow. "Social Movements and Elections: Toward a Broader Understanding of the Political Context of Contention." The Future of Social Movement Research, vol. 2, no. 1. (2013), pp. 325-346. doi:10.5749/minnesota/9780816686513.003.0019.

Miller, Nathan. New World Coming: The 1920s and the Making of Modern America. New York: Simon & Schuster, 2010.

Weiss, R., and R. S. McElvaine. "The Great Depression: America, 1929-1941." The American Historical Review, vol. 90, no. 2 (1985), pp. 507. doi:10.2307/1852837.

Cite this page

Stock Market Crash: Catalyst of the Great Depression - Essay Sample. (2023, Jan 26). Retrieved from

Free essays can be submitted by anyone,

so we do not vouch for their quality

Want a quality guarantee?
Order from one of our vetted writers instead

If you are the original author of this essay and no longer wish to have it published on the website, please click below to request its removal:

didn't find image

Liked this essay sample but need an original one?

Hire a professional with VAST experience!

24/7 online support

NO plagiarism