Causes of the Great Depression
The Great Depression had multiple causes. During the 1920s, consumerism in the United States reached a new level of frenzy. People could now afford new luxury goods using a new concept called installment buying. People in the urban areas began experiences a higher standard of living and increased wages, even though American farmers were seeing a decrease in their income due to the end of World War I. Over-speculation of stock values and buying stocks on margin began to create a new interest in the stock market.
Meanwhile, countries in Europe, especially Germany, had yet to recover from the damage inflicted by WWI and the Treaty of Versailles. As a result, tariffs were increased and international trade began to suffer. At the same time, the United States Federal Reserve was not properly supervising the activities of the banks.
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