Causes of the Great Depression

1. Causes of the Great Depression

2. Postwar Boom • Increases • Average income 43% • Factory production 72% • Business profits 80% • Stock market at an all time high

3. Warning Signs, by 1929 • Unemployment and poverty • Farmers losing lands • Consumption decreasing • Stock prices dropping

4. Black Tuesday • October 29, 1929 – Stock Market Crash • Not “the” cause, one of many

5. # 1 Republican Economic Policies • Pro- business policies • Trickle down theory • High tariff rates • WWI debts not being paid back

6. #2 Unchecked Stock Speculation • Speculation • Buying on margin • Banks loaning out depositors money • Brokers got nervous and began asking investors to pay up = stock prices begin fall

7. #3 Stock Market & Banking Collapse • Noticing the downturn, other investors panic and also begin to sell....PANIC • “Black Tuesday”, 10/29/29 • Banks collapse – “speculation loans” given with depositors money • More unemployment, more defaults on loans • 1932, 25% banks closed

10. #4 Overproduction of Goods • New technology = high production • By 1929, market was filled with goods many Americans couldn’t buy • Farmers take out loans to mechanize • Hit especially hard • no world market

12. #5 Decline of Farming Industry • Took out loans to mechanize • Crops abundant, but no customers by 1929 • Can’t pay loan = lose farm • No one can buy the lands, banks take the loss • Property values decrease by billions

14. Dust Bowl • mid/southwest U.S. • Drought, bad farming techniques • Huge dust storms • Flee to CA & face prejudice “Okies”

17. # 6 Unequal Distribution of Wealth • 1929, 1% of Americans own 59% of wealth • 60% below poverty line • Corporations don’t pass profits on to workers, replace workers with machines

18. CurrentSituationin U.S.