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What Caused The Great Depression Of 1929? – Know Facts, Effects And Summary

What Caused The Great Depression Of 1929
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The largest fall in the stock market on the 29th of October, 1929, popularly known as Black Tuesday, was what caused the great depression of 1929. The 10-year great depression in the history of the world economy created turbulence worldwide during the year 1929-1939. The facts about the great depression not only affects the USA but had its shortcomings worldwide.  Many people mistake correlation with the causes of the great depression. The actual depression began after the crash of the stock market. The adverse effects of the great depression lasted till the Second World War, affecting many countries. 

The Great Depression (1929-1939)

Right after the end of the 1st World War, the USA emerged as the winner and experienced a prosperous and cultural period. The opportunities increased and the number of women increased in the working sector. The introduction of new gadgets like vacuum cleaners invited people to experience riches. This inspired people to invest in the stock market to get richer. The production slowed down, making it hard for companies to keep up with the stocks. Thus resulting in the Great Depression.

What Are The Causes Of The Great Depression And How Did It End

Most people refer to the declining stock market as the cause of the Great Depression but that’s not completely true. It is more like a mistaking correlation with what caused the Great Depression of 1929. To mark the initiation of the Great Depression, it was right after the decline not because of the declining stock market. After World War 1, although the USA came out as a victorious nation experiencing prosperity and richness, it faced a lot of economical issues. The high rate of investment done by people of the USA not only doubled the American Stole Money but also increased the investments by a record-breaking 218%. The continuous loaning of money from banks forced them to utilize the customer’s deposited funds. 

On the 24th of October, 1929 when the market opened, a record-breaking stock sale was observed in the history of the stock market, 12.9 million shares were sold at once. This dragged the stock market down, draining America’s deposited wealth. The 24th of October, 1929, since then was known as “Black Thursday”.  On the 29th of October, 1929, commonly called “Black Tuesday” broke the previous stock selling record adding further to the Great Depression. 

The bank depositors gathered to collect their credits before bankruptcy leading the bank to take loans and sell further stocks. This brought forward the credit crisis. With America’s frozen credit, Germany, France, and Britain experienced a downfall too. The Revenue Act of 1932 passed by Congress only worsened the situation. 

What Caused The Great Depression Of 1929?

The reason for what caused the Great Depression of 1929 was the massive bank system failure of the USA and poor response to tackle the problem. The rise of Hitler in 1945, during the darkest hour of the economic crisis, gave hope to the American market. The war created job opportunities, helping the world to rise from the Great Depression.  

Millions of men and women joined the military forces helping the nation while many got involved in the production of war-related machinery and equipment. 

Effects Of The Great Depression – Black Tuesday

The extensive stock market crash marked the beginning of the 10-year Great Depression that the industrialized world ever faced. The 29th of October, 1929 was termed as the “Black Tuesday” marking the biggest downfall in stock market exchange history. The devastating effects of the Great Depression equally affected both rich and poor countries. The economic disaster initiated by the US spread the effects of the Great Depression by experiencing a wide fall in GDP by 15% worldwide. 

Even the Great Recession experienced a GDP fall just by 1%, which is relatively much less than the 10-year Great Depression. Production declined, unemployment increased, and taxes and prices dropped at an enormous rate. The only source of employment was the primary sector like farming, mining, and logging which also faced a downfall in subsequent years.  

Facts About The Great Depression

While discovering the facts about the Great Depression, you will come to know how hard it was for the government to tackle such big figures. Here are some facts about the Great Depression: 

  • The Great Depression is also known as the Slump of 1929.
  • The highest ever recorded unemployment rate in the USA was observed during this period of time which was 25%.
  • The Great Depression observed its peak during the years 1932 and 1933.
  • New trade policies worsened the situation while the crime rate also observed a hike.
  • The new president, Franklin D. Roosevelt who succeeded Herbert Hoover took major decisions in resolving the country’s economy. 
  • The end of the bad phase, the Great Depression, was marked by the beginning of another bad phase, World War 2.


The major effects of the Great Depression mainly included massive unemployment, company shutdown, frozen credit, zero or limited production, shrunken wages, increased poverty, and homelessness. However, the reason what caused the great depression of 1929 was the bank failure of USA, this 10-year great depression will always be remembered.

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