Black Tuesday Stock Market Crash October 29, 1929 Result not Cause Signals the start of the Great Depression *Only WWII gets America out of the Great Depression, not New Deal

Causes of the Great Depression 1. Disparity of Incomes 2. Buying on Credit 3. Farm Economy Collapse 4. laissez-faire policy and the end of Progressivism 5. Taxes 6. Stock Market Speculation 7. Federal Reserve

1. Disparity of income Roaring 20’s: good times; high employment and no inflation Gap between rich and poor was very large Majority of workers lived below poverty line ($2500 in 1929)

2. Buying on Credit At some point creditors will stop giving people credit Drop in consumer spending = lay-offs Layoffs = less spending, which then = more lay-offs

3. Farm Economy farmers produce too much, farm prices fall farmers produce more to keep up, prices fall even more farmers cannot pay their loans, default, defaulting puts banks out of business

4. laissez-faire policy and the End of Progressivism Big Business allowed to do whatever they want - laissez-faire tariff raised on foreign goods to help protect US industry child labor and minimum wage overturned

5. Taxes taxes on the wealthy are slashed Wealthy spend money on luxury items, not items produced by the common factory worker

6. Stock Market Speculation “get rich quick” buy on margin - investor allowed to borrow the money to buy stocks now People had to sell, which drove the price down even further

7. Federal Reserve charged low interest and businesses would borrow - goes to workers who buy products charge high interest people don’t borrow - discouraged lending

Government to the aid 1. because of influence of Big Business the Government issues a tariff - which made goods high other Countries can’t sell their goods in America and therefore cannot buy American Also impose their own tariff on American goods 2. President Hoover urges companies to voluntarily maintain wages and hours - companies do the opposite 3. Advocates “rugged individualism”

Impact on the People 25% Unemployment People lost their homes - took to the streets People that still had jobs had their hours and wages cut People only bought necessities - further led to lay- offs “Runs” on banks people fear losing money and take all their money out of banks

CROWD OUTSIDE A CLOSED BANK

RUN ON BANK

Postwar Europe World War I was extremely costly. Death ~ 8,000,000; Wounded ~ 19. 5 million Money ~ 338 billion The Great War left every major European country nearly bankrupt. Europe’s domination in world affairs also declined.

Postwar World Economy Late 1920s – Europe was rebuilding its war-torn countries WWI left many countries bankrupt US helped by giving out loans

What’s up with Germany? Became a democracy- Weimar Republic Lacked democratic tradition Many political parties Germans blamed the Weimar government for the loss in WW1

What’s up with Germany? Still humiliated and bitter Didn’t pay for war by raising taxes – just printed more money To pay back reparations to Allies – printed more money Money lost value Loaf of bread in 1918 = less than a mark In 1923 = 200,000,000,000 marks America loans Germany $200 million

Inflation gone mad! It’s hyperinflation

Effects Global depression Americans demand to have their loans paid back – ASAP! World trade stopped- Import taxes Every country hurt Franklin Delano Roosevelt – New Deal Creates jobs for the unemployed