What were the Reasons for Great Depression?
The Great Depression, which lasted from 1929 to 1939, remains the worst economic depression in the U.S. history (Calomiris, 1993). Historians and economists associate the October 24th, 1929 stock market crash as the genesis of the economic downturn. But, the Great Depression was not caused by one factor, several events contributed to the downturn. A combination of local and global conditions contributed to the Great Depression. According to (Ohanian, 2001), the production of American based factories dropped by more than 50 percent from 1929 to 1933, stock prices collapse to 1/10, disposable income for people dropped by 28 percent, 25 percent of workers lost job and unemployment increased from 1.6 million to 12.8 million from 1929 to 1933 among other effects. In this historical essay, the major reasons for the Great Depression will be analyzed.
The reasons for the Great Depression remain at the forefront of historical and economic debate by many scholars. The first reason for the Great Depression was the 1929 stock market crash that occurred on “Black Tuesday” (Kelly, 2019). Remembered as “Black Tuesday”, this occurred 29th October, 1929. The 1929 stock market crash is considered as the major reason for the Great Depression. During this time, the market caused panic by plunging at the opening bell. On the “Black Tuesday”, the U.S. market crashed, and this make its economic value drop by 12 percent to an extent that $14 billion of investors’ funds were wiped out. Later after two months since the October crash, stakeholders had lost over $40 billion USD (Kimberly, 2019). Despite the fact that the stock market managed to regain some of these losses by 1930, the overall U.S. economy was completely devastated. As a result, the United States of America transpired to the Great Depression.