1. The Great Depression

2. Causes
1. War debt. European countries either owed a lot of money for losing WWI (Germany) or they owed the U.S. a lot of money in loans to pay for WWI (Britain, France).

3. causes
Because all major world powers were so inter-connected, all it took was one to fail on payment and it would have rippling effects.

4. causes
When things started to get bad, the U.S. refused to make any more loans to foreign countries. That made it worse there, and less likely they would pay us back.

5. causes
2. Overproduction of agriculture. Farmers were producing too many crops (in part due to better farming technology). There was too much supply, not enough demand.

6. causes
As a result, prices kept dropping. Eventually, farmers could not make enough money to pay their mortgages. Farms started to fail. Farming was still the backbone of many economies.

7. causes
3. Unequal Distribution of Wealth. Only a few people were well off in the 1920s-most were struggling. The invention of credit did not help.

8. causes
Factories and businesses were making too much stuff (the rich could only buy so much). When they realized this, they made major cut-backs (laid a lot of people off).

9. causes
As unemployment went up, less people could afford to buy things. So, businesses made more cut-backs. It was a vicious cycle.

10. causes
4. Stock Market Crash. People thought the Stock Market was a sure thing. They bought stocks like crazy…even if they couldn’t afford it.

11. causes
As soon as the crash happened, people panicked. They pulled all their money out of the stock market.

12. causes
People also pulled all their money out of the banks. Banks began to fail.

13. causes
5. Protectionism. Countries placed high taxes on foreign goods (so people would buy products from home). However, it made things worse.

14. causes
Soon, all countries had similar taxes. So, for example, in America we wanted Americans to buy American products. We made foreign products more expensive.

15. causes
But, all other countries in the world put high taxes on American products. So, we were not selling enough overseas.

16. causes
Also, when European countries were short on money, they would not re-pay their loans to us. Again, we were all inter-connected.

17. effects
Unemployment sky-rockets
Businesses Fail
Farms Fail
Banks Fail

18. effects
People lose confidence in capitalism and democracy…they turn towards authoritarian leaders.
Fascists
Nazis
World War II breaks out!