CBSE · Class 10 · Social Science · History: The Making of a Global WorldWhat were the main causes of the Great Depression of 1929? Explain its impact briefly.

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. There were two main causes of this depression. First, agricultural overproduction remained a major problem. As agricultural prices fell and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income. This worsened the glut in the market, pushing down prices even further. Second, in the mid-1920s, many countries financed their investments through loans from the US. While it was easy to raise loans in the US when times were good, US overseas lenders panicked at the first sign of trouble. In the first half of 1928, US foreign 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.