1. Causes of the Great Depression

2. Serves as the central bank of the United States
The Federal Reserve
Serves as the central bank of the United States
Created to:
- Supervise and regulate banks
- Regulate interest rates between banks
- Control the amount of currency in circulation
- Loan money to banks

3. Words Of The Wise Stocks: shares in business ownership whose price
and value fluctuate
Speculation: short term investment in cheap stocks
which will be sold at great profit later
Margin: gambling on the market by buying stocks
at a fraction of the actual cost
- An investor puts down 5% of the cost of the stocks
- The broker loans the rest using the stock as collateral
- If prices rise the investor repays the broker
- If prices fall the broker seizes the stocks
- In order to float these loans brokers borrow from banks
- Banks borrow from the Federal Reserve and each other

4. A period of extended and severe economic decline
What Is Depression?
A period of extended and
severe economic decline
with high unemployment
and low production

5. Cause And Effect Of The Great Depression
Speculation On The Stock Market
Market was saturated with short term investments.
People were not putting money in banks.

6. Cause And Effect Of The Great Depression
Buying Stock On Margin
No real money to back investments.
Investors could not pay brokers.
Banks had no money.

7. Cause And Effect Of The Great Depression
Monetary Policy
Credit was frozen.
There was not enough money to allow the economy to bounce back.

8. Cause And Effect Of The Great Depression
Wealth Distribution
Not enough buying power for consumers.
Underconsumption: Goods were stacking up in warehouses.

9. Cause And Effect Of The Great Depression
Agricultural Overproduction
Overproduction meant farms did not turn a profit.
Did not need, or could not afford, laborers.

10. Cause And Effect Of The Great Depression
Low Demand For Industrial Products
Overproduction +
Underconsumption =
Unemployment

11. Cause And Effect Of The Great Depression
Foreign Economies Decline
Money tied up in stocks.
Banks could not loan money.
Foreign governments not buying U.S. goods

12. Cause And Effect Of The Great Depression
High Tariffs
Contributed to under consumption.
Foreign goods not being purchased.

13. Add it all up and
you get the
GREAT DEPRESSION