Describe the factors that led to the great depression of 1929

Describe the factors that led to the great depression of 1929.

THE great depression began around 1929 and lasted till the mid -1930s. During this period, most parts of the world experienced catastrophic declines in production, employment, incomes and trade. The exact timing and impact to the depression varied across countries. But in general, agricultural communities were worst affected. This was because the fall of agro prices was greater and more prolonged than that in the prices of industrial goods.
-The depression was caused by a combination of several factors :

  1. Agricultural over production remained a problem. Falling of agricultural prices as prices slumped and agricultural income declined farmers tried to expand production and bring a large volume of produce to the market to maintain their overall income. This worsened the glut in the market, pushing down prices even further. Farm produce rotted for a lack of buyer.
  2. In the mid twenties, many countries financed their investment through loans from the US. While it was often extremely easy to raise loans in the US, when the going was good. US overseas lenders were panicked at the first sign of trouble. In the first half of 1928, US overseas loans amounted to over $1 billion. A year later, it was one quarter of that amount. Countries that depended crucially on US loans now faced an acute crisis.
    -The withdrawal of US loans affected much to the rest of the world.
  3. In Europe, it led to the failure of some major banks and the collapse of currencies such as British pounds sterling.
  4. US banks also slashed domestic lending and called back loans. Farmers could not sell their products, households were ruined and business collapsed.