The Great Depression

1920s Generally a decade of prosperity Many people (especially Americans) made great profit from the war People began to spend money excessively using credit

Global Economy The economies of many of the world’s most powerful countries were connected Example: Germany owned France reparations France and England owed US lots of money in loans from WWI Germany borrowed money from US to pay reparations

Stock Market Crash Some stock prices fell and people panicked and began to sell lots of stocks On October 29, 1929 the Stock Market crashed because so many stocks were sold This had an effect on economies around the world

Bank Failures As stock prices fell, people rushed to the bank to withdraw money So many people went to the bank that the banks ran out of money Many banks were forced to close Many people never saw their money again

Unemployment Many people around the world lost their jobs People resorted to soup kitchens and breadlines to get food

Tariffs US wanted people to buy American goods so it would create American jobs US passed Smoot-Hawley Tariff – a protective tariff which taxed imported (foreign) goods Smoot-Hawley Tariff was the highest ever European countries passed retaliatory tariffs to get back at the US for S-H Tariff

Germany Germany was hit especially hard The Treaty of Versailles created difficult economic conditions before the depression The depression made it worse! High unemployment Hyperinflation – money had almost no value

Raw Materials Prices of raw materials fell which hurt the countries that grew the products Price of coffee in Brazil (a major export for Brazil fell) Price of cotton in India fell England textile industry relied on Indian cotton