Causes Of The Great Depression

LOW INTEREST RATES THE FEDERAL RESERVE KEPT INTEREST RATES LOW FOR OVER A DECADE, BASED ON THE REPUBLICAN ECONOMIC PRINCIPLES (SUPPLY SIDE ECONOMICS) OF THOSE IN POWER THIS LED TO COMPANIES BORROWING MONEY AND EXPANDIND MORE THAN NECESSARY

Installment Plan For much of the 1920’s Americans were purchasing high prices items (cars, refrigerators) on Installment Plans. Purchasers could make small down payments and pay the remainder of the item’s price in monthly installments.

Overproduction Companies made more goods than could be sold Farmers grew more product/crops than what was needed Many farmers had gone into debt to buy land or equipment during WW1

Falling Demands With too many goods unsold, production was cut back and employee laid off Unemployment began to steadily rise

The Stock Market Crashes Stock Market was propelled throughout much of the 1920’s because individuals bought on credit By the Summer of 1929investors began to sell their stocks in droves, and the massive sell- offs made prices drop Black Thursday October 29th 1929

The Stock Market Crash http://www.history.com/topics/1929-stock-market-crash

Banks Close Farmers and Factory Workers (all people) couldn't pay back their loans to the banks because their products decreased significantly in value Loans go into default and banks begin to close because they have no money Thus, people lose their life savings

Banks Close https://www.youtube.com/ watch?v=iPkJH6BT7dM

= + Banks Close Banks have no money to give people People Default on Loans People Loose savings

1920’s Problems BANKS Have NO $$ PEOPLE LOST SAVINGS & JOBS Factories making Too Much, Farms growing too much BANKS Have NO $$ PEOPLE LOST SAVINGS & JOBS NO ONE TO HELP! Factories Fire Workers (Don’t need them) Farm Prices fall (Farmers can’t make $$) Banks Close because they have no money: Loans have not been paid back, can’t give people their savings Farmers & Factory Workers can’t pay back loans to Banks: DEFAULT!!