What are the causes and effects of the Great Depression?

The Great Depression was a severe economic downturn that lasted from 1929 to the late 1930s, affecting countries all over the world. Its causes were complex and multifaceted, and its effects were profound and long-lasting.

Causes of the Great Depression

The immediate cause of the Great Depression was the stock market crash of 1929, which wiped out billions of dollars in wealth and triggered a wave of panic selling. However, there were many other factors that contributed to the economic collapse, including:

• Overproduction and underconsumption: In the years leading up to the Great Depression, American industry was producing more goods than consumers could afford to buy.
• Stock market speculation: Many Americans were investing in the stock market with borrowed money, leading to an unsustainable bubble that eventually burst.
• Banking system failures: Banks were under-regulated and many were making risky loans, leading to widespread bank failures.
• Protectionist trade policies: Many countries implemented trade barriers to protect their own industries, leading to a decline in international trade.

Effects of the Great Depression

The effects of the Great Depression were felt around the world, and included:

• Mass unemployment: Millions of people lost their jobs, and the unemployment rate reached as high as 25% in some countries.
• Homelessness and poverty: Many people lost their homes and were forced to live in shantytowns or on the streets.
• Decline in international trade: The decline in international trade led to a decrease in production and widespread economic hardship.
• Political unrest: The economic crisis contributed to the rise of extremist political movements in many countries, including fascism in Germany and Italy.