Economic Factors of the Great Depression

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Presentation transcript:

Economic Factors of the Great Depression SS8H8: b. describe the economic factors that resulted in the Great Depression

Stock Market Speculation People bought stocks and paid only part of the cost at the time of purchase. Even though it wasn’t paid for, the investor could sell it. If stock went up, all could be paid. This made prices higher than what they were really worth.

Over-Borrowing Borrowing more money that they could afford to repay. Hurts banks, so banks can’t loan money to businesses Businesses don’t get paid, people get laid off work

Personal Debt Owing more that you can ever pay off (homes, cars, boats, etc.)

Bank Practices Banks bought stock, when the market crashed…banks lost money. Runs on the bank, people withdraw all the money…the bank closes.

Laissez-faire Attitude of living life to the fullest without worry about the future. Believing the economy would take care of itself; that the government couldn’t do anything to help.

Industrial Overproduction Factories and farmers produced more good than they could sell. Had to stop production, so people loose jobs. Farmers drove prices so low they couldn’t pay debts…then drought hit.

High Tariffs Tax on imports. Made it hard for other countries to sell goods in the U.S. and get money to repay wartime loans or buy U.S. products.

Depressed Agricultural Production Drought (Dust Bowl) Boll Weevil (in the South) Less product=less money to pay debts