What were the causes of the Great Depression?
Can you imagine waking up one morning and suddenly realizing that all your investments and savings have disappeared? Keep in mind that at that time there was no federal deposit insurance system, which means that if your bank fail, you lose all your savings and there was no possible way to ever get your money back. However, this is not just a bad scenario, but the reality for millions of Americans during the 1930's. This nightmare has a name in the World history - it is called the Great Depression.
The Great Depression was worldly economic downturn that started in 1929 and it lasted nearly a decade till 1939. The timing and severity of the Great Depression varied substantially across the countries. In the United States, it began in the summer of 1929. As a matter of fact, the longest and most severe depression ever experienced originated in the United States and spread across the countries.
It characterized with sharp decline in output, severe unemployment rates and acute deflation in almost every country of the globe. It was triggered by the sudden crash of the stock market. This day, October 29, 1929 is known as "Black Tuesday".
The time of the financial collapse is seen by many economists and historians as one of the unsolved mysteries of the previous century.There were many probable causes of this devastating time such as unequal distribution of wealth, the massive bank failures, the stock market crash, reduction in a purchasing across the board, buying on credit known in 1920s as installment buying, etc. However, it seems that the heart of the Great Depression is the monetary contractions and wrong government policies. The prominent writer, John Garraty, wrote in his book on the...