What caused the great depression?

The Great Depression was a worldwide economic collapse, between 1929 to the beginning of World War II (1939). The worst years of the depression were from 1930-1933. The Depression began, on October 24, 1929, when stock prices on the New York Stock Exchange dropped drastically. The financial crisis, which was due to the collapse of Wall Street, led to the Great Depression. The tumble was caused by forced liquidation of large brokerage accounts and also because of The Federal Reserve Board raising interest rates in early 1929.This brought enormous poverty and unemployment, and sent wages and production levels crashing.

The cause of the Depression was the result of mishandling and judging of the economy by the governments. In 1928 before the collapse of Wall Street, American president, Herbert Hoover, had declared that the United States would soon see a time when poverty would be banished from his nation. Soon the president's judgement was proved wrong. Problems began to arise rapidly during the early 1920s as the Americans moved away from international issues and social concerns. The 'Roaring Twenties' was all about getting rich and enjoying new trends, new inventions, and new ideas. Growing imbalance in world trade played a big role towards the Great Depression also.

Depression is a time of low economic activity, distinguished from a recession by being prolonged and sustained, characterised by continuing falls in output, high and rising unemployment and companies burdened with unsold stocks because demand is low. (www.encarta.com)

As the market continued to drop and the stockholders sold their stocks, panic increased among the people. Thousands of people lost their money as stock prices continued to fall. Businesses failed and banks closed, wages dropped and the people bought less. Most lost their jobs and could not afford to pay rent or buy food or...