The Causes of the Great Depression Chapter 11.1 The Causes of the Great Depression

The Long Bull Market The Election of 1928 The Stock Market Soars Hoover vs. a Catholic!!!! “I have no fears for the future…” The Stock Market Soars Bull Market And if I don’t have the money Margin! How can that go wrong? Speculation

The Great Crash The Stock Market Crash Banks Begin to Close The people stopped buying A story about tulips October 29th, 1929 Black Tuesday Losses on an unimaginable scale One years earnings Banks Begin to Close Banks gave the “margin” & invested as well Banks cut back on loans Bank runs 10% of banks close by 1932

The Roots of the Great Depression The Uneven Distribution of Income Too much stuff being made Output increased faster than wages Installment plan issues And when people stop buying The Loss of Export Sales WWI drained foreign countries of money They’re not buying our stuff “Buy American!” Hawley-Smoot Tariff

Cont Mistakes by the Federal Reserve Interest rates change behaviors More willing to make loans, more willing to take loans Low rates when they should be high Raised rates when they should be low