Question

What economic factors and conditions converged in the late 1920's to plunge the nation into the Great Depression?

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Answer 1

The great depression period was started in 1929.During the depression period the economy faced a worst downturn.The following are the several economic factors and conditions that plunge the nation into the great depression.

• The unequal distribution of wealth is one of the reasons for great depression. In the late 1920's, more than 60% people were living below poverty level and the richest people owned most of the nation's wealth. This caused a major disparity between rich and the poor.
• Stock market crash is also one of the major reasons for great depression. The stock market was booming in the late 1920's but largely on speculation that relied on Continued expansion and easy credit. When the prices began to fall, investors lost confidence in the market and they decided to sell the shares. Stock market crash was happened on October 19, in the year 1929 on tuesday, people sold 16 million shares of their stock which caused stock market crash.
• Due to the crash of stock market, many people lost their investment and savings and they began to withdraw their money. Due to this, banks lack the credit to lend which increased the worsening of economic conditions.
• Million acres of farmland were rendered useless because of severe drought in 1930's and the overproduction and under consumption of farm products made the farmers to face great depression.
• With the fall in the economic conditions, people reduced spending, and the high rate of unemployment also increased.