9.01: The Great Depression & It’s Causes (1929 – 1942) US Economy in a severe decline (contraction) Millions of people lose their jobs Banks go out of.

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Presentation transcript:

9.01: The Great Depression & It’s Causes (1929 – 1942) US Economy in a severe decline (contraction) Millions of people lose their jobs Banks go out of business & people lose their life’s saving

Easy Credit Very easy to get credit & many people overspent (go into debt) during the 1920s When economy collapses, loans are not repaid!

Overproduction Farmers losing money because of crop overproduction = can’t pay back loans Businesses made more products than people can buy = losing money – Why aren’t we trading these goods to other countries? Fordney-McCumber Tariff raised tariffs & foreign countries didn’t want to trade with us

Buying on Margin Buying stock on credit (easy credit) in hopes of making fast money to pay off loan – When economy collapsed, these people couldn’t repay loans! Overspeculation: We believed the stock market & economy would continue to do well throughout the 1920s!

Unbalanced Foreign Trade High tariffs (Fordeny- McCumber Tariff & others) reduced trade between the US & other countries

Uneven Distribution of Wealth Most of the nation’s money was in the hands of a minority of the population (2%) – they weren’t spending it!

Gov’t. Policies 1920s Boom: Interest rates reduced to encourage borrowing & spending (easy credit) 1930s Bust: Money supply reduced to discourage spending