1. Causes of the Great Depression
Mote

2. Causes of the Great Depression
Depression- a period of low economic activity and wide-spread unemployment
Underlying Causes or Fundamental Causes- develop and build up over a long time—it takes a long time before the effects are felt
Immediate Cause- causes that come into being just before the major event itself occurs

3. Causes of the Great Depression
Overproduction
Laissez-faire
High tariffs
Industrial overproduction
Stock Market speculation
Bank Failures
Over-borrowing
Personal Debt
Stock Market Crash
Underlying Causes
Immediate Cause

4. Causes of the Great Depression
Effects
1.Overproduction- (farm)- farmers continued to produce more and more food due to technological advances like the tractor
As production grew farm prices dropped (too much supply- not enough demand)
Farmers reacted by boosting production even more
1. Farm produce prices plummeted (rapidly went way down) 2. Many farmers could not pay their loans on their farms 3. Banks foreclosed on many farms

5. Causes of the Great Depression
Effects
-Business was left alone- no regulations -American businesses reported record profits and production was at an all time high -The rich got richer -The working class received only a low percentage of the wealth
2.Laissez-faire–(a French word that means – let do)
was the American economic policy in the 1920s
the belief that government should have a “hands off” approach to business
**No Government Regulation**

6. Causes of the Great Depression
Effects
3.High tariffs
Europe was already in a depression
US placed high tariffs on European goods
coming into the United States
European countries reacted by placing a high tariff on US products entering into European countries
International trade was at a standstill

7. Causes of the Great Depression
Effects
loss of profits
many companies went out of business
people laid off, lose jobs
Unemployment skyrockets
consumption continues to decrease
4.Industrial overproduction-
American businesses were producing far more than could be consumed
Too much supply not enough demand
some people had turned to installment buying

8. Causes of the Great Depression
Effects
5.Stock Market Speculation
Americans felt they were going to be prosperous forever
people began to increasingly invest in the stock market
buy low –sell high
The stock market began to rise in 1928
On September 3, 1929 the market reached a record high
then it began to decline
October 24, 1929 panic selling began as 12.8 billion shares of stock changed hands

9. Causes of the Great Depression
Effects
6.Bank Failures
People lined up to take out savings to cover loans to buy stocks
bank runs
Loans were not being repaid
banks did not have enough cash on hand
Over 5,000 banks closed by 1932
When a bank closed, the depositors lost savings

10. Causes of the Great Depression
Effects
7.Over-borrowing
Investors had borrowed money to buy stocks and now they could not pay their loans
now investors could not pay for their original investments
Many people run to the bank to withdraw money to pay off their loans

11. Causes of the Great Depression
Effects
8.Personal Debt
Workers, being paid low wages
people bought on credit
they couldn’t repay

12. Causes of the Great Depression
Effects
9.Stock Market Crash –October 29, 1929
Black Tuesday
mass selling of stock
Stock prices dropped severely
Selling price was much less than purchasing price
most stocks were worthless
people rush to the banks to pay off loans and withdraw money

13. END