C AUSES OF THE G REAT D EPRESSION

W HAT TO D O : On your graphic organizer you need to label the five main causes of the Great Depression Next to each cause you need create another branch (bubble) and in it provide – in your own words – at least two details that helps explain the cause

U NEQUAL D ISTRIBUTION OF W EALTH US Grows Wealthy Economy grows by $74 billion; US has 40% of the world’s wealth Uneven Earnings Top 1% increase wealth by 75%, whereas the other 9% see only a 9% increase Workers’ Wages Workers’ wages increase only a little compared to the growth of the overall economy

H IGH T ARIFFS AND W AR D EBTS WWI leaves European economies weak. Economic declines makes it difficult for European countries to purchase US goods Also, to encourage US citizens to buy US goods a high tax is placed on imports. As a result other countries trade less with the US This means there are less people tp purchase US goods that are being made in abundance

O VER P RODUCTION In Industry Factories produced a lot of goods, but workers’ wages were too low for them to buy the products Since trading overseas decreased, products were not being bought, meaning less workers needed to produce more, and less jobs created In Farming Demand for agriculture was high during WWI, but declined afterward With less people buying, farmers could not pay back loans for homes and equipment – going bankrupt

S TOCK M ARKET C RASH 1929 AND THE C OLLAPSE OF B ANKS Millions of Americans invested their money in stocks to get rich quickly; stocks became overpriced People “bought on margin” meaning they took out loans to buy stocks. The banks used their patrons money to invest in stocks as well When the market crashed, investors lost their money and banks lost patrons money People pulled all their savings out of banks (what was left anyway) and banks began going bankrupt and closing

G OVERNMENT P OLICIES President Hoover ran on the slogan of continued prosperity in 1928 Hoover’s ideas on self-reliance effected his Depression policies – he did not believe that government should not help the people or individual suffering Hoover was known for “doing nothing” as he did not create government programs to create jobs or provide any aid for those affected by the Depression