Sooner or later a crash is coming which will take the leading stocks and cause a decline from 60 to 90 points in the Dow Jones Barometer.” This and many others speeches like this scared people into selling there stocks before the inevitable would happen.
This was a leading causes that assisted the Great Depression become one of the bleakest and most studied events in the history of our country: yet not the only cause.
During the 1930s and 1940s, the United States experienced a period of extreme economic instability and decline now referred to as the Great Depression.
The Great Depression led to massive unemployment, insecurity around the banking system due to bank closings, and a dramatic drop in the stock market.
The Federal Reserve (The Fed) wanted to raise the discount rate to slow the boom, but was slow to do so because it meant raising interest rates for businesses and individuals who needed credit.
At that time, the Fed did not have the ability to set margin requirements which would have overcome this problem.
There are many contributing factors but not one specific event can be pin pointed for starting the depression.
It is believed that some events contribute more than others-such as the Stock Market Crash of 1929.
In 1929, the Fed did raise the discount rate, but the destructiveness of the excessive stock market speculation had already taken its toll on the US economy.
The raising of the discount rate only hastened the inevitable recession.