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Why did the Great Depression happen?

A:

Quick Answer

The stock market crash of 1929 and the subsequent financial panic that followed marked the beginning of the Great Depression. The stock market crash caused consumers to panic and banks to fail.

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Full Answer

During the stock market crash of 1929, the United States federal government cut the supply of money by one-third, which inevitably restricted any hope for a recovery. Analysts believe the government wanted to send a message to financial institutions that was supposed to make them more responsible. Instead of accomplishing that, the government sent the country into a deep depression that it struggled to come out of.

The day the stock market crashed is known as "Black Thursday." After that day, the depression quickly worsened. By 1933, unemployment rose to 15 million people, 40 percent of all the farms in Mississippi were in foreclosure, and many states began trying to offer assistance to those without work.

The Great Depression affected the entire world and its effects were felt in the U.S. until after the end of World War II. Unemployment eased during the war, primarily because millions of American men were called to fight in the war. Women worked in factories and in other industries that were called upon to help in the war effort and this eased unemployment as well. This, combined with banking and welfare reform programs put into place by President Franklin Roosevelt helped the nation and in turn, the world, out of the depression.

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