Economic Factors of the Great

DepressionSS8H8: b. describe the economic factors that resulted in the Great

Depression

Stock Market Speculation People bought stocks and paid only part of

the cost at the time of purchase. Even though it wasn’t paid for, the investor

could sell it. If stock went up, all could be paid. This made prices higher than what they

were really worth.

Over-Borrowing Borrowing more money that they could

afford to repay. Hurts banks, so banks can’t loan money to

businesses Businesses don’t get paid, people get laid

off work

Personal Debt Owing more that you can ever pay off

(homes, cars, boats, etc.)

Bank Practices Banks bought stock, when the market

crashed…banks lost money. Runs on the bank, people withdraw all the

money…the bank closes.

Laissez-faire Attitude of living life to the fullest without

worry about the future. Believing the economy would take care of

itself; that the government couldn’t do anything to help.

Industrial Overproduction Factories and farmers produced more good

than they could sell. Had to stop production, so people loose

jobs. Farmers drove prices so low they couldn’t

pay debts…then drought hit.

High Tariffs Tax on imports. Made it hard for other countries to sell

goods in the U.S. and get money to repay wartime loans or buy U.S. products.

Depressed Agricultural Production Drought (Dust Bowl) Boll Weevil (in the South) Less product=less money to pay debts