History

What were the 4 main causes of the great depression/effects

The great Depression

Deep economic crisis that began in 1929 in the United States and lasted for about a decade. What were the 4 main causes of the great depression?

The Great Depression was a deep economic crisis that began in 1929 in the United States and lasted for about a decade.

It affected most of the world’s countries, from the most industrialized to the poorest, and became the most severe period of economic recession of the 20th century . Difficulties emerging from the crisis led governments to consider new ways of understanding economic processes by questioning the market’s ability to find a balance on its own .

The Great Depression occurred in the context of an economy in constant growth since the Industrial Revolution , globalized and characterized by the strong flow of exchanges throughout the world. Although it began with the fall of the New York Stock Exchange , in the United States, on October 29, 1929 , its effects spread to the rest of the countries of the world.

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Causes and consequences of the Great Depression

4 Main Causes What were the 4 main causes of the great depression

A sum of different factors resulted in the collapse of the economic circuit with the consequence of a stagnation of the economy in the following years, some of them were:

  • During the 1920s the United States had great economic development . Industries were modernized and began to produce more products in less time and at a lower cost.
  • At the end of the 1920s, agricultural production and construction began to stagnate, this caused a decrease in consumption . Meanwhile, industrial companies, favored by a credit system, began to produce more than the market could consume.
  • The decline in sales of industrial products produced a wave of layoffs in industries. Unemployment, which reached 30% in the United States, resulted in an even greater decline in consumption. What were the 4 main causes of the great depression
  • Faced with rumors of the losses of companies, whose shares had reached very high values ​​in previous years, investors tried to dump the shares and therefore their price fell precipitously.

Other Causes What were the 4 main causes of the great depression

  • People began to withdraw their savings from banks, which, unable to return the entire mass of deposits at the same time, went bankrupt. The failure of the small local banks dragged down the largest banks and international subsidiaries.
  • The Great Depression cycle lasted 4 years , between 1929 and 1933, but its effects continued until the late 1930s. What were the 4 main causes of the great depression?

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Consequences

The consequences of the Great Depression were felt around the world. Some of them were the following:

  • The consumption of industrialized goods was reduced , this led to the closure of many companies affected by the lack of demand. What were the 4 main causes of the great depression?
  • As a consequence of the above, industrial production was significantly reduced and unemployment figures increased throughout the world.
  • The United States spent almost 4 years with negative economic indicators.
  • European countries that received credits from the United States stopped doing so.
  • The countries that provided raw materials to industries lost the income that those exports meant.
  • Unemployment and poverty figures increased throughout the world.
  • The terms of the capitalist economy were reconsidered as the intervention of the States was needed to reactivate the economy. Thus, new forms of capitalism emerged with greater state intervention in the control of prices, credits, job creation, etc. What were the 4 main causes of the great depression?

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