Causes of the Great Depression

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What were some causes of the Great Depression?
• Inequality
• Problems in agriculture
• Overproduction
• Problems abroad
• Laissez-faire
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How did inequality contribute to the Great Depression?
• Unequal distribution of wealth- 60% of families earned below the minimum liveable income of $2,000 a year.
• Republican tax policies favoured the wealthy
• Workers in old industries didn't share the prosperity, due to competition from newer industries
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How did inequality contribute to the Great Depression contd.
• Working-class women, African Americans and Native Americans, the elderly and the rural poor had a low standard of living.
• Farmers didn't prosper during the boom.
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Problems in agriculture
• As farming techniques improved, farmers started producing more food. However, demand fell and so did prices.
• Tariff wars made it difficult to sell surplus abroad.
• Thousands of farmers had large debts and lost their farms. Sharecroppers evicted.
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How did overproduction contribute?
• Industries and businesses were producing more than could be consumed
• Those who could afford consumer goods had already bought them, so there was a decline in demand.
• 1927: 63% of homes had electricity, but electrical products were of no use to 37%
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How did problems abroad contribute?
• Businesses struggled to sell surplus goods because foreign governments put tariffs on US goods in response to tariffs imposed by the US government. This particularly affected agriculture.
• Limit on the amount of surplus goods that could be exported abr
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How did laissez-faire contribute?
• The laissez-faire policy of the Republican presidents meant there was no regulation and not enough safeguards in the economy to deal with any future problems.
• This especially applied to the banks and the stock market
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Laissez-faire contd.
• During the boom, there'd been high demand for shares, but many companies’ share prices had reached unrealistic levels.
• Banks became involved in
speculation on the stock market by lending money to stockbrokers. They invested the public’s savings in sh
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What was the impact of these issues?
These issues meant that business profits were decreasing. Shareholders’ and speculators’
confidence began to erode, so they began to sell their shares.
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When was the Wall Street Crash?
September-October 1929
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What happened in the Wall Street Crash?
• 24th Oct: Nearly 13 million shares were sold on the Wall Street stock exchange.
(Black Thursday).
• Tues 29th Oct: 16 million shares were sold as prices continued to fall. Known as ‘Black Tuesday’.
• Shareholders lost billions of dollars.
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What happened in the crash contd.
• The rise of speculation during the 1920s meant that many had bought their share on the margin.
• Many speculators were unable to pay their loans from banks back so many banks went bankrupt.
• People with savings in these banks lost all their savings.
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Other cards in this set

Card 2

Front

How did inequality contribute to the Great Depression?

Back

• Unequal distribution of wealth- 60% of families earned below the minimum liveable income of $2,000 a year.
• Republican tax policies favoured the wealthy
• Workers in old industries didn't share the prosperity, due to competition from newer industries

Card 3

Front

How did inequality contribute to the Great Depression contd.

Back

Preview of the front of card 3

Card 4

Front

Problems in agriculture

Back

Preview of the front of card 4

Card 5

Front

How did overproduction contribute?

Back

Preview of the front of card 5
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