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5 Main Causes of the Great Depression

Post on: 16 Март, 2015 No Comment

Paul Kitchen

Transcript

Analyze 5 main causes of the Great Depression.

2. 3. Causes of the Great Depression

Farm Depression of the 1920s

Prices of farm products fell about 40% by 1921 and remained low through the 1920s 4. Farmers were producing more than American consumers were consuming 5. Some farmers lost so much money they couldn’t pay the mortgage on their farm 6. Farmers had to rent the land or move

Causes of the Great Depression

Farm Depression of the 1920s

Prices of farm products fell about 40% by 1921 and remained low through the 1920s 7. Farmers were producing more than American consumers were consuming 8. Some farmers lost so much money they couldn’t pay the mortgage on their farm 9. Farmers had to rent the land or move

Causes of the Great Depression

Overproduction in Industry

Factories were producing products, however wages for workers were not rising enough for them to buy the goods 10. Too few workers could afford to buy the factory output 11. The surplus products could not be sold overseas due to high tariffs and lack of money in Europe

Causes of the Great Depression

Uneven Distribution of Income

Industrial productions increased about 50% but the wages of the industrial workers rose far more slowly 12. As a result, these workers couldn’t buy goods as fast as industry produced them

99% of the population received a 9% increase in their income, while the top 1% saw their income rise by 75%.

1,230,000 Americans

121,770,000 Americans

13. Causes of the Great Depression

High Tariffs and War Debts

European nations owed $10 billion ($115 billion in current dollars) to the U.S. in reparations 14. Their economies were devastated and had no way of paying the money back 15. U.S. insisted on repayment. 16. This forced the allies to demand Germany pay reparations imposed by Treaty of Versailles 17. Europe could no longer purchase goods from the U.S. 18. 1922, U.S. passed the Hawley-Smoot Act 19. Instituted high tariffs on industrial products 20. Other nations retaliated and world trade declined

21. Stock Market Crash

What were the causes of the 1929 stock market crash?

What is “buying on the margin”?

22. How did $30,000,000,000 evaporate?

Investors would buy stock that they thought would quickly rise in value, once the price went as high as the investor thought it would go they sold.

24. Buying on Margin

Investors only had to put 5% of the stock value down; the stockbroker loaned the money they didn’t have

Banks loaned stock brokers money for the margin loans, they used the savings people had deposited in the bank for these loans.

The savings was not insured.

26. Monetary Policy

What were the attempts made to deal with the crisis?

What were President Hoover’s efforts to resolve the Depression?