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Great Depression

The Great Depression was a severe economic downturn that occurred in the 1930s, and was the longest and most severe recession in modern history.

There were several main causes of the Great Depression:

  • Overproduction and overcapacity: Many industries, particularly in the manufacturing sector, had been producing at an unsustainable level, leading to a surplus of goods and a decline in prices. This made it difficult for businesses to turn a profit, leading to a decrease in investment and hiring.
  • Stock market speculation: The stock market had been on a bull run in the late 1920s, with prices reaching unsustainable levels. When the market began to decline in 1929, it triggered a panic, as people rushed to sell their stocks. This led to a collapse in stock prices and a reduction in wealth, which further exacerbated the economic downturn.
  • Bank failures: Many banks had invested heavily in the stock market, and when stock prices collapsed, they were left with large losses. This led to a wave of bank failures, which exacerbated the economic downturn and reduced the availability of credit.
  • International trade: The depression was exacerbated by a decline in international trade, as countries imposed tariffs and other trade barriers in an attempt to protect their domestic industries. This led to a further decline in global economic activity.

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