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lost their jobs. When paychecks stopped, people began losing the things they bought on credit, including their homes. As un-bought goods accumulated in warehouses, unemployment rose to above 25%.

4. There was too much debt. Businessmen opened factories on speculative bank loans. Consumers bought many things easy-to-obtain credit. People bought cars, homes, and furniture on money they had not earned yet. As the demand for manufactured goods decreased, so did production, and, eventually businesses failed. As consumers started earning less, but still hampered by the same debt, they stopped buying other goods so that they could pay their bills.

5. The government made it worse. As the American economy tanked, the government sought to protect our workforce with a high tax on foreign imports. Foreign countries, who mostly imported our farm goods, retaliated. In 1929 we were exporting about $5.1 worth of goods. By 1930, that figure dropped to about $2 billion.

6. Midwest farms became a dust bowl. The American Midwest suffered the most serious drought in years. Farmers, already feeling the pinch of bank failures, overextended credit, and with dropping farm prices, they could not even pay their taxes. Many farmers sold out or had their farms foreclosed by the bank.

There were also intangible, psychological causes of the stock market crash, which led to Great Depression. As the over-valued stocks began to fall, a selling frenzy started that overloaded the ticker tape technology of the day. There was no controlling nor stopping the panic as investors lost confidence in the market and scrambled to salvage what they could of their "paper" wealth. The system broke down and would not recover for ten years.

In the case of banks that had too much money lent out with no prospects of collecting, the panic spread to depositors everywhere. Once that panic and lack of confidence took root, there was no stopping depositor runs on the banks and the eventual cascade of failed financial institutions all over the country.

Finally, America of the 1920's was an experiment in popular capitalism run amok. We over-produced in markets that were not buying, went into debt without reasonable prospects of being able to repay, and invested in a stock market that seemed to promise something for nothing. In the end, it was plain old greed that did us in. Sadly, it took a World War to jump start our economy and bring us out the Great Depression.

Learn more about this author, Jerry Curtis.
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