What economic factors led to the Great Depression?

Stock Market Speculation What was it? Buying stocks at a low price with a plan to quickly sell them when the price rose and make a lot of money quickly.

Stock Market Speculation What were the results? People had to sell stock for less than they had bought it. They couldn’t pay back borrowed money. The stock market crashed because of the low prices of stocks.

Over-borrowing What was it? People borrowed more money from the bank than they could pay back if they had a change in their lifestyle – loss of job, no bonuses, etc. This was money for homes and cars – lifetime investments

Over-borrowing What were the results? Could not re-pay loan and bank would foreclose (take back) their house. Banks would then have to try to sell the house

Bad bank practices What were they? Loaning money to people who couldn’t pay it back Making loans with little or no security to back them.

Bad bank practices What were the results? People defaulted on loans. People lost investments/money if banks made bad or fake investments

Laissez-faire = Hands off What was it? No government interference with business. Businesses engaged in unsound/unfair practices in order to make money.

Laissez-faire People lost money in schemes What were the results? People lost money in schemes Banks loaned money to people who never paid it back

Industrial overproduction What was it? Factories made too many products and they couldn’t sell them.

Industrial Overproduction What were the results? Factories have products that aren’t bought so they may have to shut down. Factories may have to layoff workers.

Depressed agricultural prices What were they? The prices farmers were paid for their crops dropped because they grew too many.

Depressed agricultural prices What was the result? Farmers did not have enough money to pay back loans to banks or buy extra items from local stores.