The Great Depression The Great Depression was the worst economic slump ever in U. S. history, and one, which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The mal distribution of wealth in the 1920's existed on many levels.
Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U. S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes.
These market crashes, combined with the mal distribution of wealth, caused the American economy to capsize. A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing. During that same period of time average wages for manufacturing jobs increased only 8%. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits.
In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%.