Causes of the Great Depression

Causes of the Great Depression

The FRENZY of selling stocks is to the Great Depression as is The assassination of the Archduke to WWI

1. Republican Economic Policies • A. Trickle down economics • did not work • B. Tariffs(taxes) on Imports

2. Stock Speculation • A. Making risky investments for large profits • B. Feeding frenzy of buying-Legalized gambling • C. Bought stock and then sold it for a higher price (profit) • D. Artificial inflation drove stock prices higher • E. BUYING ON MARGIN • F. Inventors withdraw from market, prices fall • G. BLACK TUESDAY, OCTOBER 29, 1929 • H. RUN ON THE MARKET!!! SELLING FRENZY!!!

3. UNREGULATED BANKING INSTITUTIONS • A. Crash triggers collapse of most U.S. banks • B. Money is uninsured • C. Run on the banks!!! • D. Banks closed

The run on the banks to take $$$ out

4. OVERPRODUCTION OF GOODS • 1. Marketing brought consumer demand for goods • 2. Advertising of the 20’s enticed buying (consumerism) • 3. The market was flooded with an endless stream of goods. • 4. People stopped buying, business’ let workers go • 5. There became MORE goods on the shelves and stockrooms –SURPLUS of goods

5. FARMING INDUSTRY DECLINE • A. Farmers borrowed heavily from banks to pay for new technological equipment, seeds • B. Farmers failed to sell their surplus crops • C. Banks forclosed on farmers who were unable to repay their loans • D. The Dust Bowl

6. Gap Between the Rich and the Poor

Causes of the Great Depression