Question

Explain the causes of the Great Depression.

Answer 1

The Great Depression was a result of many different factors. The post-war global economy was weak. Also, agricultural over-production proved to be a nuisance, which was made worse by falling food grain prices. To counter this, farmers began to increase production and bring even more produce to the markets to maintain their annual incomes. This led to such a glut of food grains that prices plummeted further and farm produce was left to rot. Most countries took loans from the US, but American overseas lenders were wary about the same. When they decreased the amount of loans, the countries economically dependent on US loans faced an acute crisis. In Europe, this led to the failure of major banks and currencies such as the British pound sterling. In a bid to protect the American economy, USA doubled import duties. This worsened the world trade scenario. All these factors contributed to the Great Depression. It affected USA the worst on account of its being a global loan provider and the biggest industrial nation.