The Great Depression was a severe economic downfall, starting in 1929 and lasted until about the late 1930's or early 1940's. The Great Depression was the longest and most widespread depression of the 20th century. Economists have very different ideas and theories about what exactly caused the Great Depression. Many believe that the stock market crash of 1929 was the immediate and direct cause of the Great depression. However, the Great Depression was caused by many specific economic events leading up to the stock market crash of 1929, such as unequal distribution of wealth among the people and companies, bank failures, major decline in industries, and the collapse of the international trade.
One major contributor to the Great Depression was poor distribution of wealth among the people and corporate powers. On average, people's wages stayed the same even as prices for these goods increased. The factories and farms still continued to produce at the same rate, but demand for their products was decreasing. As a result, more and more workers became unemployed, until 25% of the population was out of work. Also there was a major unequal distribution of income that led to the "richest 1% of Americans owning 34% of the country's savings while about 80% of people had no savings at all" (Fremon 16). A major reason for this large gap between the rich and the poor was the increased manufacturing output. "From 1923-1929 output per worker increases 32%."(Fremon 18) However during that same time "average wages for manufacturing jobs increased only 8%"( Fremon 23). As a result, production cost rose quickly and wages rose slowly causing much of the benefit to go towards corporate profits. This large gap between the rich and the middle class/poor made the country's economy very unstable. In order for the nation's economy to be stable total demand has to equal total supply.
