What is an Economic Depression

Economic Depression – Do You Know What Caused the Great Depression?

Care for some snippets of history? Do you know the history of The Great Depression? I’m sure one time or another you’ve heard of it. The worst economic depression in the history of the United States of America is by far the aptly named The Great Depression. Nevertheless, numerous people in this day and age still have no inkling what’s the real cause or reason behind this terrible economic depression. And according to some historians and expert economists, there are top 5 reasons or causes for the occurrence of the Great Depression. As a matter of fact, there were many causes of this economic slump that were both local and international in nature.

In other words, it affected and impacted not only America but also the whole world. This phenomenon was actually the direct cause for the ascent of extremism in Germany, which conclusively gave rise to World War II. So here now are the Top 5 Reasons/Causes of The Great Depression.

1. The stock market crash in 1929 – most people thought that the crash in stock market which took place on October 29, 1929 was similar to the Great Depression. Nonetheless, that was one of the chief causes of the economic depression, and 2 months after that fateful downfall, it’s approximated that several stockholders lost more than $40 billion.

Though the stock market recovered some of its losses at the end of 1930, the gain wasn’t adequate to avert the economic depression.

2. Purchase declines – fears were further elevated with the stock market crash and economic difficulties and troubles were surrounding the people so they just stopped spending their cash and buying things. Eventually this paved the way to a decrease in production, that in turn led to dismissal of employees. The whole occurrence just turned out to be a savage chain of events since as the workforce is already lessened, people didn’t have sufficient funds and banks and various financial institutions were not extending their credit.

3. Bank closures – all bank deposits during 1930 were not insured at that time and the depositors turned out losing their whole life’s savings and hard earned money. It was during this time that more than 9,000 banks and financial institutions flopped and eventually closed shops. But there are also banks which endured decline and closure, yet they just played it safe and they ceased providing credit and this resulted to many failing and weakening businesses thus, people don’t have sufficient funds to spend.

4. The drought in the Mississippi Valley in 1930 – this truly generated a terrible desolation among the farming industry and community although not a direct cause of the Great Depression itself.

Most farmers together with their families were not able to look for jobs to provide for their family and themselves so they have to live on charity.

5. The U.S. policy with Europe – as more and more businesses and enterprises in America begin to decline, The U.S. began charging a high tax on imports just to protect those American companies and businesses. Consequently, the result is less trade in the European nations and the U.S. alongside with economic payback gambits.

Author: Amy Twain

The author of this article Amy Twain is a Self Improvement Coach who has been successfully coaching and guiding clients for many years. Amy just published a new home study course on how to boost your Self Esteem overnight. More info about this "Quick-Action Plan for A More Confident You" is available at http://www.FabulousSelfEsteem.com

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Information on Alternative Treatments for Depression and Children During the Great Depression.

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