Analyze The Causes Of The Great Depression

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From the late 1920s and early 1940s, the United States suffered the longest-lasting and most widespread economic downturn of the twentieth century. This economic crisis is known as the Great Depression. Event though the United States had gone into economic depression 6 months earlier, the Great Depression was the total collapse. It even grew to a critical worldwide economic depression in the 1930s, of course the timing of the Great Depression varied across different nations. The Great Depression was a result of the collapse of the banking system, reduction of purchases abroad and domestically, and a major drought known as the Dust Bowl. More than 600 banks failed each year between 1921 and 1929. The failed banks were primarily small, rural banks that people from metropolitan areas were unconcerned of. Investors and businessmen believed that the cause for these bank institution failures were their weak and poorly managed system. As the economy deteriorated, a major wave of bank failures hit during 1930 and people attempted to turn their credit into cash, which the banks failed to achieve. The banks gave abundant credits they did not have the money to support them with, which is the main reason bank failures started to occur. This led to banks closing their doors…show more content…
Since people lowered the rate of purchases, it led to the reduction of production. The reduction of production leads to less jobs, which eventually led to a massive reduction in the workforce. As people lost their jobs, they were unable to pay for items and anything they had bought through installment plans, which led to the repossession of their items. More inventory began to pile up, but the economy was still in downfall so everyone was careful as to spending his or her money. The unemployment rate rose to about 25 percent, which meant even less spending money to alleviate the
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