Ch 22 sec 1 The Great Depression 6 Causes of the Great Depression Unequal distribution of wealth (too few rich people, too many in poverty) High Tariffs and war debts Farming Crisis Over production in factories and farming (we were making too much stuff, too fast Poor banking structure Unregulated stock market

Unequal distribution of wealth Wealthiest 1% of Americans saw their wealth grow by 75%. Rest of the country 9%. More than 75% of the country earned less than $2500/year sub standard at that time. High Tariffs and War Debts With Germany having a devil of a time repaying their debts the provisional German government resorted to printing money. Result was out of control inflation.

Farming Crisis While people in the city were making bank, the farmers were struggling. With the lack of government help in subsidizing farmers and price controls. Over Production Because of rampant buying producers have to meet demands. At times we see ridiculous amounts of leftover’s called surplus. This is bad for two reasons 1: You will end up selling the item for a reduced cost and not make any money 2. If the item is perishable and becomes ruined you loose everything.

Banking Structure Poorly managed and almost no government involvement. Many banks made ill advised loans to people who couldn’t pay them back. Bank also invested into the market with other peoples’ deposits hoping to get rich. Stock Market Literally a free for all. Almost everyone was involved in trading in some way. Shady practices (illegal now) were common place and like the banks free from government control Margin Buying Insider Trading Stock Pools Over Speculation of Stocks

The Crash of ‘29’ Started the week of October 21, On Wednesday and Thursday of that week Stock prices fell through the floor due to rapid selling and no one buying. Roughly $5 billion in value was lost in hours On Friday and Monday the largest banks in the country put their (and others) money in the market as a way to stable the market. It only worked for a few hours. On Tuesday, Oct 29, the Market bottomed out completely million shares were dumped and billions of dollars of value simple disappeared.

Ch 22 sec 1 The Depression affected the world. When we could no longer loan money out, countries like Germany, Britain and France felt the hit too. Congress passed the Hawley- Smoot tariff, which was the highest tariff in history. Europe responded with their own tariffs causing limited international trade. As a result Europe would spin into a period of political instability especially in Germany, Spain, and most of Eastern Europe.