Causes of the Great Depression

Overproduction and Under consumption The US was producing too much Not enough money to buy it all Some was purchased on credit- not good Still not enough of the products being produced were being bought- inventories of unpurchased goods sat in warehouses, so companies began producing less, and laying off workers- so unemployment rose

High Tariffs These were good for American business, but restricted international trade Tariff retaliation When we raised our tariffs other countries raised their on American good in retaliation, making it hard to sell goods in foreign markets

Speculation, Shaky Banking and Inflated Stocks Speculation and buying on margin Stocks and real estate A “bull” market vs. a “bear” market Biggest issue came in borrowing more then you could ever hope to pay off- banks allowed it, and people would make money but very dangerous. Casued inflation of stock prices bc more people were buying stocks then could actually afford them

Black Tuesday- Oct. 29, 1929 Chain reaction- Businesses Banks Stock Market Crash Black Tuesday- Oct. 29, 1929 Chain reaction- Businesses Banks Stock market halted and then crashed- people got scared and started selling off their stocks- flooding the market with a product forces the price way down. = stack market crash In 3 weeks stocks lost half their value and 30 billion dollars was lost Chain reaction- businesses could no longer raise money through selling stock 26,000 businesses failed in 1930 banks- people who lost money in the crash could not pay back their loans so banks failed- many people lost their lifes savings

Crash Becomes Worldwide Investing overseas American investors had invested in foreign markets, to try and rebuild the European economy, now they called in their funds from Europe crushins the European economy and spreading the depression to Europe Germany defaulted on its reparation payments which meant the allies weren’t able to make payments on their loans. Depression worst in germeny

No safety net Shantytowns Farmers and food Human Experience Safety net- federal programs to help those who have fallen on hard times, unemployment relief, retirement benefits or bank deposit insurance Shantytowns- one day you were working the next you had lost everything and you were on the street, created shantytowns of homeless people. Many depended on the soup kitchens and bread lines provided by local charities Farmers were unable to sell enough of their source to make a profit and went bankrupt= no more growing food= food shortage, but no one can afford it.