Essay on The Great Depression

During the 1930s the United States suffered the longest, deepest and most pervasive economic crisis in its history. The Great Depression which started in the United States spread to the other industrial countries causing a rapid decline in the production and sale of goods, sudden rise in unemployment, closure of banks and unprecedented increase in unemployment rates. Its impact reached every nation and every social class.

Majority think that the primary reason for the Great Depression was the crash of the stock market in October 1929. While it is historically true that the fall of the stock market in 1929 preceded the Great Depression which wiped out 40% of the paper values of the common stock, the collapse of the stock market and the Great Depression were just the results of what already appeared as serious flaws in the United States economy which started during the 1920s.

One of the underlying causes for the Great Depression was the heavy indebtedness of the American farmers brought about by their borrowings from banks for the purchase of their own land which was secured by their own land.

The second reason for the Great Depression was the collapse of the banking system. The banks were partly to be blamed for the Great Depression because of the unsound practices performed by banks during the 1920s.

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