Explain the causes of the Great Depression
The main causes of the Great Depression were as follows : Agricultural over-production : As the agricultural prices were falling and there was decline in agricultural income, the farmers tried to increase their income by more production. However, this resulted in further fall in prices. Farm products rotted in the market for lack of buyers. This created more hardships for the farmers. Financial dependence of many countries on US and crisis : Many countries of the world were dependent on US. They had taken loans from that country. It was easy to raise loans in US if everything was fine. But condition did not remain so. In the first half of 1928 the overseas loans had 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 led to failure of banks, collapse of currencies (the British pound-sterling), slump in agricultural and raw material prices. The US government doubled import duties to protect its economy and it proved to be another severe blow to world trade.
