1. The Great Depression Begins

2. 1. Overproduction of goods
Companies made more than could be sold
Not everyone could afford these goods

3. Uneven distribution of Wealth
The middle class were not wealthy; they had jobs b/c of the industrialization & consumerization of the American market place
this middle class depended on their salaries and when productivity declined they lost their jobs
and b/c of low savings, they had to cut back on their purchases
this decline in consumption among the middle class worsened the depression

4. Decline in Exports to Foreign Nations
Hawley-Smoot Tariff: Raised taxes on foreign goods to an all time high
In response foreign nations quit buying American goods
Europe burdened by debt and rebuilding WW I

5. Overspeculation on the Stock Market
People bought stocks on-margin
Stocks were purchased with loans from banks
It is like getting a loan to go to the casino
Stocks were valued higher than the actual profits of the companies

6. Black Tuesday: The “spark” that begins the Great Depression
October 29, 1929
Prices began falling on stock
In a panic, everyone begins selling
Stocks once worth $40 a share were now worth pennies
People who had bought stocks on-margin could NOT pay back loans

8. Bank failures begin
Banks being calling in on-margin loans that had been made for stocks
People cannot pay banks back
People begin bank runs, pulling all their savings out of banks
Fearful of losing deposits
Banks do not have the peoples’ cash to return to them – it has been lost on stocks
BANKS FAIL!

9. ECONOMIC CYCLE: With additional unemployment  purchasing power declined  reduced productivity  unemployment rises again
Unemployment
Purchasing Power Productivity

10. HAWLEY-SMOOT TARIFF Passed to promote people to buy American
Highest tax on foreign goods in U.S. History
Led to other countries:
To boycott American goods
To raise their taxes on American goods
Increased Depression accross the globe

11. HOOVERVILLES
Shanty towns built by homeless

12. THE DUST BOWL Over farmed the soil in Great Plains
1932: Drought and heat spell
Creates large dust storms
People suffocate from inhaling dirt