Causes of the Great Depression Ms. Lambly U.S. History II

Causes of the Great Depression

Ms. LamblyU.S. History II

1928 Presidential Election Republican Herbert Hoover

VS.Democrat Alfred E. Smith

Three P’s:

Prosperity

Prohibition

Protestantism

Causes of the Great Depression

I. The Long Bull Market Rising stock prices

throughout the 20’s Buying “on margin” -

credit Strong economy

CRASH!

Causes of the Great Depression

• In turn, businesses suffered and laid off workers.

II. Overproduction

• Farms and factories overproduced beyond the demand.• Wages did not rise as fast as prices.• Therefore, people couldn’t afford to buy many goods.

“Cycle of Disaster” – many businesses went bankrupt

Businesses cut production

Workers sufferedfrom wage cutsand lay offs.

People had little or no money to spend.

Demand forgoods fell.

Causes of the Great Depression

III. Banking and Credit System Many consumers bought high cost items on the installment plan

Bank Failures

Hawley-Smoot Tariff- raised to highest level in American history

Damaged American sales abroad

Imports cost more $$$

* People that bought stocks on margin (credit) could not repay their debts.

The Philanthropist by, Herb Block (Dec. 5, 1930)

During the Great Depression approximately 25% of the workforce was unemployed. People who lost their jobs began selling five-cent apples on the streets of American cities, providing a symbol of the economic hardships of the era.

* People that had invested their savings in stocks had little or nothing left.

A foreclosure sale in Iowa in the early 1930s when "the bottom fell out of everything." Military police were on hand to keep farmers from disrupting the auction. ca. 1935.