Causes of the Great Depression. The rich get richer and the poor get poorer in the 20s F 1929- 3/5 of the nation’s wealth was owned by 2% of the pop.=

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Presentation transcript:

Causes of the Great Depression

The rich get richer and the poor get poorer in the 20s F /5 of the nation’s wealth was owned by 2% of the pop.= 27,500 wealthiest earned the same as the 12 million poorest families. F More than half of the nation’s families lived in poverty F Average man or woman purchased a new suit of clothes once a year. F Only half the homes in the cities had electricity or furnace heat. F 1 in 10 homes had an electric refrigerator. F /5 of the nation’s wealth was owned by 2% of the pop.= 27,500 wealthiest earned the same as the 12 million poorest families. F More than half of the nation’s families lived in poverty F Average man or woman purchased a new suit of clothes once a year. F Only half the homes in the cities had electricity or furnace heat. F 1 in 10 homes had an electric refrigerator.

Oct 29, 1929 = Black Tuesday= Stock Market Crash F People frantically began to sell their stocks before the prices fell lower. = 16 mill. Shares of stock sold that day. F By mid Nov. $30 Billion dollars had been lost. F People frantically began to sell their stocks before the prices fell lower. = 16 mill. Shares of stock sold that day. F By mid Nov. $30 Billion dollars had been lost.

Causes of the Great Depression F 1. Uneven Distribution of Income F B/c over half of the pop. lived below poverty level, most ppl. could not afford to purchase goods. F Profits from businesses were usually given to stockholders in dividends but few companies were giving raises to their workers F Lack of balance betw. Production and consumption. US is extremely productive but most Americans lacked purchasing power to even have the basic necessities provided. F 1. Uneven Distribution of Income F B/c over half of the pop. lived below poverty level, most ppl. could not afford to purchase goods. F Profits from businesses were usually given to stockholders in dividends but few companies were giving raises to their workers F Lack of balance betw. Production and consumption. US is extremely productive but most Americans lacked purchasing power to even have the basic necessities provided.

2. Easy Credit F Ppl piled up huge debts in the 20s to purchase new goods - buy on credit. F By 1929, ppl cannot pay their debt or buy more goods. F Buying Stocks on the Margin - 20s ppl would borrow money to buy stocks in companies w/ the idea that they would pay it back w/ the $ made. F When the market crashed ppl couldn’t pay back loans = banks go under b/c of bad loans. F Life saving were swept away in a single day. F Ppl piled up huge debts in the 20s to purchase new goods - buy on credit. F By 1929, ppl cannot pay their debt or buy more goods. F Buying Stocks on the Margin - 20s ppl would borrow money to buy stocks in companies w/ the idea that they would pay it back w/ the $ made. F When the market crashed ppl couldn’t pay back loans = banks go under b/c of bad loans. F Life saving were swept away in a single day.

3. Unbalanced Foreign Trade F Throughout 20s the US kept trade tariffs high = protect US products from competition from other nations. F Hawley-Smoot Tariff creates the highest tariff in US history. (MISTAKE) F Nations unable to sell their goods in US were also unable to buy US products F Economic warfare- many nations cut back on US made products to retaliate b/c of high tariffs. = US exports continue to drop. F Many nations had been devastated by WWI and had heavy war debts - no ability to purchase US goods. F Throughout 20s the US kept trade tariffs high = protect US products from competition from other nations. F Hawley-Smoot Tariff creates the highest tariff in US history. (MISTAKE) F Nations unable to sell their goods in US were also unable to buy US products F Economic warfare- many nations cut back on US made products to retaliate b/c of high tariffs. = US exports continue to drop. F Many nations had been devastated by WWI and had heavy war debts - no ability to purchase US goods.

4. Mechanization F During the postwar boom, our nation industrializes = new plants, new technology, new machines. F Factories turn out a lot more goods but they employ fewer workers. F Fewer workers meant less $ paid out in wages = less $ to buy products. F During the postwar boom, our nation industrializes = new plants, new technology, new machines. F Factories turn out a lot more goods but they employ fewer workers. F Fewer workers meant less $ paid out in wages = less $ to buy products.