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Tag Archives: Twentieth Century

What Caused the Great Depression

Man is meant to learn from history or risk making the same mistakes, yet there still seems to be no general consensus on what exactly caused The Great Depression – the biggest market crash in history. Many have thrown around the term ‘depression’ to describe the recent financial crisis that has hit the world. The downgrade of credit rating for the United States of America, the Euro Zone Crisis and auxiliary problems are all swirling around the world today, but is it as bad as the Great Economic Depression of the 1930s and if so, why have we not learned from it. While we know for a fact that mitigating factors occurred, yet researchers still haven’t concisely linked them to The Great Depression; which was a big reason for the German rise of extremism which led to World War II. Facts about the Great Depression are measurable; let’s go over what they were.

Black Tuesday

Black Tuesday was a massive stock market crash that occurred on October 29th, 1929. To an economist it is a date of such tragedy that competes even with the sinking of the Titanic. Many however lump the American Great Depression in with Black Tuesday although perhaps the one contributed to the other existing. Two months after Black Tuesday, stockholders had lost $40 billion dollars which is more than the GDP of modern countries that exist even today. There was a slight rebound as things were getting better but it was too little too late and the world entered The Great Depression.

Breaking the Bank

They say you should never trust a banker, but at least we’ve got legal recourse against negligence these days. In the 1930s your savings were uninsured which meant if a bank failed, you lost all your money without compensation – about 9000 banks failed leading up to The Great Depression in America. This lead to less banks being brave enough to hand out loans; which only made things worse since less people were capable of creating expenditure. At the same time economic taxes were put in place to “protect” American companies from competing with European products. The act lead to almost zero imports and international economic retaliation against the States, perfect breeding ground during The Great Depression to drive things further into the dust.

The Dust Bowl

Proving that even Mother Nature steps into the picture to help the downfall of man, the vast amounts of drought that occurred in Mississippi Valley in 1930 caused many to be unable to pay their taxes or generate vital produce. Many farmers who were in debt had to sell their farms at no profit and so The Dust Bowl was born. There were a few other circumstances that bolstered the power of The Great Depression and although it was indeed a time of great depression for many poverty stricken families across the world, we must learn from our mistakes lest we make them again.

Eugene Calvini is a writer and forex market enthusiast; a proud owner of a forex account and a certified Metatrader 4 forex broker, he enjoys sharing interesting economic news.

 

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