The Major Causes of the Great Depression.

Essay by billzfan11High School, 11th gradeA+, September 2003

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The Great Depression of the world was triggered by a single event, the stock market crash of 1929. Obviously, the international economic collapse was not caused by that single event, but was the result of years of economic instability. The United States fell from prosperity to penury in a few weeks, but the European nations did not have the luxury to experience any prosperity at all. Ever since the resolution of the First World War, the nations of Europe have been apprehensive of the cocoon spun by America's commerce isolation. One of the major causes of the Depression was the isolation of America's economy from international trade. This key factor can be sorted into two separate causes, the lack of an open market and the inability to maintain a stable currency rate. Another major cause was the continuation of debts, loans, and reparations. These three factors are all connected with each other and have all contributed in weakening the Western economy.

Never-theless, the European nations would not have plunged into economic collapse along with the United States if they had not depended entirely upon the American economy.

The financial costs of World War I had left many European nations with enormous war debts. Allied nations such as Great Britain and France owed large sums of money to the American banks, sums that were too great to be repaid out of their insolvent economies. These nations relied on reparations from Germany to pay off their debts. However, Germany's economy had itself been ruined by the immense cost of operating the war that it could not afford to transfer any portion of its meager wealth and soon became deeply entrenched in postwar reparations. Any attempt to reduce debts by these nations was met with outright refusal by the United States, who had...