Causes of the Great Depression

An overlooked cause of the Great Depression is the move from agriculture to industry as a source of employment. In the USA, something like 25% of the population transitioned from being farmers to being factory workers in a decade or so, and the great depression was, in part, the working out of the readjustment of the economy to so large a fraction of the population changing occupations.

Something that was just pointed out in a TIK video (BankWars Episode 1) was that during World War 1 governments created a massive quantity of weapons and in order to do so paid large wages for factory workers (in arms industries) while hurting the price of farm goods. This was a significant stimulus to people moving off of farms and into factories during this time. I’m not sure—I need to do more research—that this happened as much in the USA as in Europe, but this is an intriguing piece of the puzzle to fit in.

I had mainly attributed this move to falling prices for farm goods due to an increase in efficiency due to mechanization (things like large, powerful diesel powered tractors, for example). I’ve no doubt that this is a significant part of the move, as further mechanization of farming has resulted in even more people moving out of the farming sector while more food is being produced in the US than ever. (It’s been more than a few years since I last looked it up, but I believe that only about 5% of the population of the US works in agriculture.)

However, this transition being massively speeded up by government interference would certainly help to explain it happening so quickly as to cause a great depression (which had, at its peak, something like 25% unemployment). The timing is a little iffy for this; the great depression began in the late 1920s while the great depression ended in 1918. I really need to do more research to see if this actually fits in. (Another place I need to look is how things were going in Europe because the Great Depression was a worldwide phenomenon with interlocking problems caused by international trade collapsing.)

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