The Great Depression Begins

1. Overproduction of goods Companies made more than could be sold Not everyone could afford these goods

Uneven distribution of Wealth The middle class were not wealthy; they had jobs b/c of the industrialization & consumerization of the American market place this middle class depended on their salaries and when productivity declined they lost their jobs and b/c of low savings, they had to cut back on their purchases this decline in consumption among the middle class worsened the depression

Decline in Exports to Foreign Nations Hawley-Smoot Tariff: Raised taxes on foreign goods to an all time high In response foreign nations quit buying American goods Europe burdened by debt and rebuilding WW I

Overspeculation on the Stock Market People bought stocks on-margin Stocks were purchased with loans from banks It is like getting a loan to go to the casino Stocks were valued higher than the actual profits of the companies

Black Tuesday: The “spark” that begins the Great Depression October 29, 1929 Prices began falling on stock In a panic, everyone begins selling Stocks once worth $40 a share were now worth pennies People who had bought stocks on-margin could NOT pay back loans

Bank failures begin Banks being calling in on-margin loans that had been made for stocks People cannot pay banks back People begin bank runs, pulling all their savings out of banks Fearful of losing deposits Banks do not have the peoples’ cash to return to them – it has been lost on stocks BANKS FAIL!

ECONOMIC CYCLE: With additional unemployment  purchasing power declined  reduced productivity  unemployment rises again Unemployment Purchasing Power Productivity

HAWLEY-SMOOT TARIFF Passed to promote people to buy American Highest tax on foreign goods in U.S. History Led to other countries: To boycott American goods To raise their taxes on American goods Increased Depression accross the globe

HOOVERVILLES Shanty towns built by homeless

THE DUST BOWL Over farmed the soil in Great Plains 1932: Drought and heat spell Creates large dust storms People suffocate from inhaling dirt