Causes of the Great Depression Mote

Causes of the Great Depression Depression- a period of low economic activity and wide-spread unemployment Underlying Causes or Fundamental Causes- develop and build up over a long time—it takes a long time before the effects are felt Immediate Cause- causes that come into being just before the major event itself occurs

Causes of the Great Depression Overproduction Laissez-faire High tariffs Industrial overproduction Stock Market speculation Bank Failures Over-borrowing Personal Debt Stock Market Crash Underlying Causes Immediate Cause

Causes of the Great Depression Effects 1.Overproduction- (farm)- farmers continued to produce more and more food due to technological advances like the tractor As production grew farm prices dropped (too much supply- not enough demand) Farmers reacted by boosting production even more 1. Farm produce prices plummeted (rapidly went way down) 2. Many farmers could not pay their loans on their farms 3. Banks foreclosed on many farms

Causes of the Great Depression Effects -Business was left alone- no regulations -American businesses reported record profits and production was at an all time high -The rich got richer -The working class received only a low percentage of the wealth 2.Laissez-faire–(a French word that means – let do) was the American economic policy in the 1920s the belief that government should have a “hands off” approach to business **No Government Regulation**

Causes of the Great Depression Effects 3.High tariffs Europe was already in a depression US placed high tariffs on European goods coming into the United States European countries reacted by placing a high tariff on US products entering into European countries International trade was at a standstill

Causes of the Great Depression Effects loss of profits many companies went out of business people laid off, lose jobs Unemployment skyrockets consumption continues to decrease 4.Industrial overproduction- American businesses were producing far more than could be consumed Too much supply not enough demand some people had turned to installment buying

Causes of the Great Depression Effects 5.Stock Market Speculation Americans felt they were going to be prosperous forever people began to increasingly invest in the stock market buy low –sell high The stock market began to rise in 1928 On September 3, 1929 the market reached a record high then it began to decline October 24, 1929 panic selling began as 12.8 billion shares of stock changed hands

Causes of the Great Depression Effects 6.Bank Failures People lined up to take out savings to cover loans to buy stocks bank runs Loans were not being repaid banks did not have enough cash on hand Over 5,000 banks closed by 1932 When a bank closed, the depositors lost savings http://www.youtube.com/watch?v=Fp1CttLLR0k

Causes of the Great Depression Effects 7.Over-borrowing Investors had borrowed money to buy stocks and now they could not pay their loans now investors could not pay for their original investments Many people run to the bank to withdraw money to pay off their loans

Causes of the Great Depression Effects 8.Personal Debt Workers, being paid low wages people bought on credit they couldn’t repay

Causes of the Great Depression Effects 9.Stock Market Crash –October 29, 1929 Black Tuesday mass selling of stock Stock prices dropped severely Selling price was much less than purchasing price most stocks were worthless people rush to the banks to pay off loans and withdraw money

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