The causes of the Great Depression How the booming 20s became a huge bust!

Harding in Office Had promised a “return to normalcy” but his time in office was far from normal Promoted laissez-faire Surrounded himself with the Ohio Gang His poker friends that were greedy and drunk People looking to get rich off the government

Teapot Dome Scandal Secretary of the Interior Albert B. Fall. Leased Federal oil reserves at Elk Hills, CA and Teapot Dome, WY to private companies in return for (Bribes) Oil was for naval use Went to Jail…1st Cabinet member to go to jail Harding died in office before scandal could touch him.

Silent Cal (Calvin Coolidge) in Office “The man who builds a factory, builds a temple” “The business of America is business!” Placed his trust in business, laissez- faire approach Lowered taxes for businesses Had honest people working for him Economy was booming…but not for long

A Bull Market (rising stock prices) “A chicken in every pot and a car in every garage.” During the Republican rule of Harding and Coolidge America was prospering and no one could see what was about to happen but there were signs Another Republican, Herbert Hoover, gets a elected in 1928, another laissez-faire guy …..things are looking good but are they???

Early Signs of the Great Depression Farmers: were amounting large debts and were unable to sell their huge crops Huge gap between the rich and poor Leads to fewer consumers when products are overflowing in the market Overproduction: new technologies increased output but wages remained too low for workers to buy the goods…leads to too many goods and not enough consumers (supply is greater than demand)

More Causes Installment Plan: Buying on Margin: People were buying things with small down payments then paying the rest in monthly payments Consumers use this when they buy consumer goods like cars and washing machines Buying on Margin: People were buying stock on credit Would give a small down payment and pay the rest in monthly payments

And More Causes Speculation: Easy Credit: People were buying stock using credit hoping that stock prices would rise but if they didn’t people could loose everything Easy Credit: Buying on credit was a new idea, before the 1920s if you didn’t have the money you didn’t buy it (Christian Ethic) Debt had been a thing to fear but now everybody was doing it

The Boom is a Bust For a month stock prices had fallen…too many people are selling stocks which only makes the problem worse Black Tuesday: October 29, 1929 Sparked the Great Depression 16 million shares were sold Called the Great Crash People lost their fortunes in hours

The Great Depression 1929-1941 Economy was ruined Unemployment peaked which meant even fewer goods were bought People run to the banks to withdraw their money but banks don’t have all the money on hand at that time…led to bank failures/closings

Hawley-Smoot Tariff Hoover meant to help the situation by protecting American businesses from foreign competition The Hawley-Smoot Tariff raised taxes on foreign imports so that American products were cheaper In response foreign companies raise taxes on American goods coming into their country…hurt US because now US could not sell their products in America nor in other countries