The great depression occurred from 1929 to 1939. It is described as the worst ever experienced economic downtime in the history of the United States. According to economists and historians, the prime cause of great depression was the crash of the stock market that occurred on 24th October 1929. The market lost over 12 percent of its value and stockholders experienced a loss of approximately 40 billion dollars.
Second, the bank failure, crash of the stock market affected all levels of economy. About 700 banks collapsed during that period. People who had invested in Federal deposit insurance also lost their money.
Third, the drought conditions, the economic downtime become worse when the country experienced a prolonged drought along with farming methods that were not using soil-preservation practices. Massive dust storms attacked the towns leading to the death of livestock and crops and causing a range of diseases to individuals.
One of the main factors in the Great Depression was the almost complete collapse in the US banking system. The stability of a capitalist economy, such as America's, relies on a strong banking system which can provide regular supplies of credit and investment to individuals and businesses.
But, in the wake of the Wall Street Crash, American banks were unable to do this. Like most other businesses, their confidence had taken a huge hit when the stock market collapsed. And it wasn't only the banks who lost confidence; individual savers and investors did too. In the ensuing panic, tens of thousands of people literally queued around the block to withdraw their money from banks, which meant that the banks had less capital available to finance business investment. This had a damaging domino effect on businesses, many of whom relied on bank loans to keep themselves going. To make matters worse, banks started calling in their debts, which placed an additional strain on businesses, forcing many of them to the wall and creating a downward spiral of mass unemployment.
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