The Great Depression: 4 Causes & A “Spark” Unbalanced economy Credit crisis International Depression Joblessness & Poverty “Spark” Black Thursday

Cause #1 Unbalanced Economy Farming shrank People could not afford to buy consumer goods Overproduction led to layoffs 1% of the population had 1/3 rd of the country’s wealth 75% of Americans lived at or near the poverty level of $2,500 a year

Cause #2 Credit Crisis Too much borrowing during the 1920’s & people get into serious credit debt and start defaulting on their loans, hurting banks Large banks, which had bought stocks as an investment, suffered huge losses Banks run out of money and are forced to close down, causing people to lose their $$

Cause #3 International Depression World economies suffer because of WWI U.S. banks invest in the stock market instead of lending money to foreign countries. Exports fall (other countries buy less American products) because of the Hawley- Smoot Tariff Act (tax on imported goods)

Cause #4 Joblessness & Poverty Workers lose jobs, by % of Americans are unemployed Those who are working have part time jobs with reduced wages Unemployment forced people into soup kitchens & bread lines Small cities made up of homeless people started popping up all over America (Hoovervilles)

“SPARK” Stock Market Crash The stock market rises dramatically throughout the 1920’s Margin buying of stocks inflates stock prices to high levels Large selloff of stocks forces prices lower Panicked stock holders try to sell their stock all at once, crashing the market Market crashes on October 24, 1929 Black Thursday!

Answer in your notebook! Which of the causes for the Great Depression do you feel was most responsible for bringing about the Great Depression? Why?