Causes of the Great Depression

1. Causes of the Great Depression

2. Disparity of Wealth

3. Stock Speculation • During much of the 1920s, the market was doing well • People were looking to get rich quick • Bought on margin (borrowed money to invest) • October, 1929 – Stock Market Crashes

4. Stock Speculation (cont.)

5. Lax Banking Regulation • Government didn’t have enough rules in place to prevent risky behavior of investors and bankers • The result – loss of money, farms, jobs, and the closing of banks • Bank runs • http://www.youtube.com/watch?v=EOzMdEwYmDU

6. Overproduction • Producers trying to take advantage of a good economy and high prices • Production increases (supply), especially of agricultural products • Increase supply and decreased demand result in plummeting prices

7. Drought • Much of the country was still agricultural based • Successive years of drought in the mid-section of our country devastated farmers • A Dust Bowl resulted

8. Hoover’s Economic Policy • Trickle-down economics • Don’t “give” people money – it will make them dependent on the government • Leave things alone, the market will fix itself • Don’t burden corporations with cumbersome and costly regulations – promote profit, this will mean the hire of more people

9. Hoover (cont.)