Causes and Consequences of The Great Depression

causes and Consequences of The Great Depression

Great Depression, unemployment rose, reaching its highest level in 1933, when 25 of the workforce was idle. Other banks extended loans to foreign countries and especially those that had participated in World War. All these hard times, however, cannot be compared with the real effects of the Great Depression. Subsequently, the farmers had to incur losses as they lacked market for their product. It is worth mentioning that some investors borrowed capital to buy the stocks.

By 1933, more than 11,000 of the nations 25,000 banks had collapsed. As GDP fell, unemployment levels continued to rise from a single digit (4 percent) in 1929 to 25 percent by 1933; and remained as a double digit till 1941 when it fell.9 percent. Farmers were disadvantaged to an extent of turning some of their crops, including corn, into fuel or compost manure (Robinson 149). More than 60 of the population was living below poverty levels, while a mere 5 of the wealthiest people in America accounted for 33 of the income, and the richest 1 owned 40 of the nations wealth. While the great rise in the stock market (from 181 points in early 1928 to 381 points in September 1929) was fueled by optimism and false hope, the plunge was flamed by stark fear. The American economy suffered more than any other economy in the world. It is evident that the United States experienced an economic boom in the 1920s. Farm failures were another reason behind the Great Depression.