By John Washington

List of causes AAlthough the stock market crash was the ultimate cause, many other long and short term causes greatly affected and worsened the Great Depression EExtreme Unequal distribution of wealth HHigh tariffs and war debts OOverproduction in industry and agriculture FFarm crisis BBuying on credit

Unequal Distribution of Wealth 11% of the richest owned 40% of the wealth of the U.S. PPart of this was due to Warren G. Harding reducing taxes and regulations which allowed monopolies to form AAs you can see, from about 1924 to the early 1930’s, the top 1% started controlling more and more

High tariffs AAfter World War 1, European countries owed the United States billions of dollars IIn 1922, the U.S. passed the Fordney-Mc Cumber Act which instituted high tariffs EEuropean nations retaliated with high tariffs and world trade declined

Overproduction AAfter World War 1 factories and farms were producing more than was needed AAmericans were buying items on credit which got them into debt. The bank took the item if one payment was missed DDebt meant less spending WWorkers made too little to buy their own output

Continued IIt was hard to sell overpriced food and items overseas due to high tariffs PPrices dropped dramatically due to overproduction FFarmers and businesses could not repay their debts which resulted in some bank failures and even more unequal distribution of wealth

Farm Crisis DDue to price drops, farmers made so little money IIn the early 1930’s, the depression worsened greatly because of the dust bowl, which was caused by severe droughts and producing the same crop over and over TThis resulted in a huge decrease of food from the Midwest, previously called the bread basket because of its huge food production

Stock Market CCalvin Coolidge’s years marked 5 years of artificial rise in the stock market TThe value was overpriced due to speculation FFraud and illegal activity ran rampant due to lack of regulation and rules TThe Stock Market was unregulated so some investors were able to manipulate huge amounts of money to their advantage

Continued OOn September 3 rd, 1929, prices reached an all time high MMarket wobbled for several weeks OOn Thursday, October 24, known as Black Thursday, many major investors tried to sell their stock, but were unable to find enough buyers due to the high prices PPrices dropped which encouraged more attempted selling

NNearly 13 million shares changed hands, more than 3 times as many as a typical heavy day, and stock values fell more than 8 billion dollars TThe next day, buying and selling was still high and President Hoover and newspapers made statements about the stability of the market

The Crash HHowever, Monday, October 28, was another horrible day NNine million shares changed hands IIt now became obvious that the stock market had crashed OOver the next few weeks, stock investors lost over 30 billion dollars RReports of suicides over lost fortunes were rampant

Effect of the Crash BBanks would loan money to buy stocks with Banks with only a 10% down payment AAfter the crash, many investors and non investors tried to draw out their savings at the same time SSavings accounts were uninsured and did not have the money in cash for the people withdrawing their savings

Continued TThousands of U.S. banks declared bankruptcy and more than 9 million savings accounts were wiped out, dragging the United States into the Great Depression TThe crash wiped out many middle class Americans UUnequal distribution of wealth and the middle class getting a severe setback led to poverty for an extremely high percentage of Americans