The Causes of the Great Depression

Introduction

The Great Depression of the 1930s is probably the most studied topic in American economic history. The Great Depression was the most severe economic disaster the United States had ever seen. In less than 3 years from its start, a quarter of the nation's population became unemployed. Private relief agencies, which we would refer to today as nonprofit organizations, collected and distributed millions of dollars in donations and provided aid to millions of impoverished families. In this environment, nonprofit leadership was critical in providing much needed relief to Americans across the country (Singleton 32). The Depression also changed the way private agencies and the federal government interacted with one another. By the end of the decade, with the arrival of World War II, private agencies became active partners with the federal government in relief efforts.

Causes of Great Depression

There are several causes of the great depression like,

After the two months of the original crash, stockholders faced a big loss of 40 billion dollars, resultant the crash of stock market.

Over all 9,000 banks failed and saving of several people has been lost.

The unemployment rate rose more than 25% and the purchasing power reduced across all the board because of stock market crashed.

Businesses are failed, so USA economic policy changed with Europe especially because the import tax were impossible to pay so US reduced the trade with Europe.

The world economic crisis could be attributed to several causes. The crisis went from a worldwide decline in prices on the agricultural and commodity markets. In the First World War, the United States, South America and some colonies had greatly expanded their production to meet the growing demand of European States, which failed largely due to the war as a producer (Watkins 32). As Europe's production after 1918 then resumed, there was an oversupply that led to falling prices significantly. For the first 2 years of the Depression, community chests performed quite well. Chests in the nation's largest cities quickly launched funding drives to address their individual community needs. As a result, community chests across the United States recorded major increases in giving during the first 2 years of the Depression. Twenty-nine of the largest community chests in the country recorded a combined fundraising total of %38.4 million in 1929. In 1930, the first full year of the Depression, these organizations raised more than %42 million. Giving to these 29 chests reached its peak in 1931 with %51.7 million in donations, a record that would stand until the second year of U.S. involvement in World War II (Jones, 1946, p. 71). Considering a larger data set of 171 community chests, 1932 was the true peak year in community chest fundraising, as this larger group raised and distributed more than %78.5 million in funding that year.

The stock market crash on the New York Stock Exchange in October 1929 had a similar effect. It was the result of overproduction and mass of leveraged speculation. After the First World War, the U.S. had their ...