1. The Great Depression

2. 1920s Generally a decade of prosperity
Many people (especially Americans) made great profit from the war
People began to spend money excessively using credit

3. Global Economy
The economies of many of the world’s most powerful countries were connected
Example:
Germany owned France reparations
France and England owed US lots of money in loans from WWI
Germany borrowed money from US to pay reparations

4. Stock Market Crash
Some stock prices fell and people panicked and began to sell lots of stocks
On October 29, 1929 the Stock Market crashed because so many stocks were sold
This had an effect on economies around the world

5. Bank Failures
As stock prices fell, people rushed to the bank to withdraw money
So many people went to the bank that the banks ran out of money
Many banks were forced to close
Many people never saw their money again

6. Unemployment Many people around the world lost their jobs
People resorted to soup kitchens and breadlines to get food

7. Tariffs
US wanted people to buy American goods so it would create American jobs
US passed Smoot-Hawley Tariff – a protective tariff which taxed imported (foreign) goods
Smoot-Hawley Tariff was the highest ever
European countries passed retaliatory tariffs to get back at the US for S-H Tariff

8. Germany Germany was hit especially hard
The Treaty of Versailles created difficult economic conditions before the depression
The depression made it worse!
High unemployment
Hyperinflation – money had almost no value

9. Raw Materials
Prices of raw materials fell which hurt the countries that grew the products
Price of coffee in Brazil (a major export for Brazil fell)
Price of cotton in India fell
England textile industry relied on Indian cotton