Great Depression What were the causes of the Great Depression, and how did it impact Georgia?

Georgia is already there!  Because of the problems caused by the boll weevil and the drought, Georgia was already in a depression. SO the Great Depression that swept the U.S. and the world really didn’t impact Georgia much. Can it really get any worse? The following slides will explain several causes of the Great Depression.

Bank practices Cause (banks) Efect Risky loans (Banks loaned too much money to people and businesses who could not pay it back.) Banks purchased large amounts of stock. When the market crashed, banks lost money. Many people tried to withdraw their money all at once (bank run). Banks failed, many closed. People and businesses lost their money.

More Bank Practices: Credit Cause Effect People borrow money to purchase goods with the plan to pay it back later. People and businesses borrowed more money than they could afford to repay. interest Excessive borrowing can cause interest rates on debt to go up. Many people lost jobs which led to inability to pay debts which leads to high interest on the debt. Banks and businesses did not get payments on loans. Banks stopped lending money. Businesses laid off workers. Businesses and banks failed.

Overproduction (Industrial) Cause Effects Factories produced more goods than they could sell. Businesses had to slow down production. Prices dropped. Loans were not paid. Workers were laid off. Businesses closed.

Overproduction (Agricultural) Cause Effects For many seasons farmers had produced too many crops. Prices dropped. Farmers lost money. (couldn't pay loans) Farm-related businesses closed. Farmers try other jobs. (industry)

War Debts Causes Effects European countries could not repay war debts owed. (i.e. Germany owed to Great Britain and France who both owed to the U.S.) Countries’ economies get worse WW2

Tariffs High taxes on imported goods Trade basically stopped. Cause (tariffs) Effects High taxes on imported goods Other countries could not afford to buy American products. Other countries could not sell to the U.S. Trade basically stopped.

Wealth Distribution Causes Effects Wide gap between the rich and poor (3% of population owned 60% of business) Low wage workers (60% of population below poverty line) Even when businesses made money, the workers wages usually didn’t improve

Stock Market Speculation Cause (Stock Market) Effects People bought stocks only paying a portion of the price hoping the value would go up, and they would repay later. People borrowed money to buy stocks. Stock prices went up making the price of the stock higher than its actual value. The market crashed on October 29, 1929 (Black Tuesday). Many people lost money. People stopped buying goods (see above)

Hoover’s response The economy did not improve. Things got worse. Cause Effects Laissez-faire Do nothing and trust that the economy will recover on its own Hoover believed that balancing the budget was the top priority, so he raised taxes. He depended on private business and charities to fix the poverty problem The economy did not improve. Things got worse. The gap between the rich and the poor got wider. Unemployment rose to 25%