Possible Causes of the Great Depression

This section of the Great Depression website examines factors affecting the market during stock market crashes including the stock market crash of 1929. The Great Depression was by no means caused by any single factor. It is all the factors together that caused the stock market crash of 1929. Set forth below is a list of factors that may help explain the present speculative market, mostly factors that have had an effect on the market that are not warranted by rational analysis of economic fundamentals:

Internet and the World Wide Web

Internet and the World Wide Web have invaded investors’ homes during the second half of the 1990s, making the population intimately conscious of the pace of technological change. The occurrence of profit growth, coincident with the appearance of a new technology as dramatic as the Internet, can easily create an impression among the general public that the two events are somehow connected. Publicity linking these twin factors was especially strong with the advent of the new millennium—a time of much optimistic discussion of the future.

The U.S. appears to occupy a leadership position

In many areas of activity, the U.S. appears to occupy a leadership position, and therefore it starts to seem only natural that confidence in the premier capitalist system would translate into confidence in the market, and that the U.S. stock market should be the most highly valued in the world.

Significant rise in materialistic values

The bull market has been accompanied by a significant rise in materialistic values. It is plausible that materialistic feelings might influence investors’ demand for stocks, which have long held out at least the possibility of amassing substantial and quick riches.

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