Origins of the Great Depression

The Great Depression was a worldwide economic downturn that began around 1929 and lasted until around 1939. It was the most severe economic slump during the 20th century. The Great Depression began in the United States and many historians believe that it can be traced to the catastrophic collapse of the stock market crash on October 29, 1929 or also known as Black Tuesday.

Stock prices fell drastically overnight, and many investors rushed to sell their stocks. This resulted in a sharp fall in stock values and many investors were ruined. As the value of these assets dipped, banks started to recall their loans and when they failed to do so, many had to close down. By 1933, 11,000 of the 25,000 banks in USA had failed. This failure of the banks and dip in confidence in the economy resulted in consumers cutting back on their spending, and thus encouraged less production. As a result, unemployment levels shot up and by 1932, US manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to 12 to 15 million workers, or 25-30 percent of the workforce.

Sources:
http://www.english.illinois.edu/maps/depression/about.htm
http://en.wikipedia.org/wiki/Great_Depression