How did the Great Depression occur?
A Review of the Literature
Khair Chibly
New Jersey City University

This paper was prepared for ESL English Composition 2, taught by Professor Monroe.
How did the Great Depression occur?
A Review of the Literature
The Great Depression The Great Depression was a downfall of the U.S. economy which had gone into a terrible period six months earlier and has been said to have started with a shattering collapse of the stock market prices on the New York Stock Exchange in October 1929. Furthermore, throughout the next three years stock prices in the United States continued to fall, until in late 1932 they had decreased to about 20 percent of their worth in 1929. Ruining many thousands of investors, this swift decline in the price of the assets worried banks and other financial institutions, mainly those who hold stocks in their portfolios. In addition, many banks were forced to be ruin and by 1933, 11,000 of the United States' 25,000 banks had fallen. The failure of so many banks, combined with a general and nationwide loss of confidence in the economy, led to bring down the levels of spending, demand and later of production. The result was enormously falling production and rising unemployment and by 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers. Cochran (1968) reported that “By this time it was clear that the decline in the economy was accentuated by the crash. Almost all indices were off at an increasing rate” (p. 7). However, what many people do not know or contemplate is how The Great Depression started. Responding to the following questions will help reveal the causes: 1. Could one cause be of the Great Depression the Stock Market Crash of 1929? 2. What role did the Federal Reserve play? 3. Could have