The Great Depression: 4 Causes The Great Depression: 4 Causes & A “Spark”& A “Spark”

FarmingUnbalanced economyCredit crisisInternational Depression“Spark” Black Tuesday

Cause #1Cause #1FARMINGFARMING

Overproduction of food for WWI then demand goes down after the war

Inventions make farming easier Farmers borrow money to buy inventions

(tractors, plows, seeders) Price of food goes downFarmers cannot make enough money to pay

back loans

Cause #2Cause #2Unbalanced EconomyUnbalanced Economy

The wealthiest 20% of the population had more money then the other 80%.

Poor and middle class people could not afford to buy consumer goods

Less goods sold means more goods left in warehouses/less workers needed

Leads to massive unemployment

Cause #3Cause #3Credit CrisisCredit Crisis

Too much installment buying during the 1920’s

People get into serious credit debt Banks started to foreclose on people when

they couldn’t repay their loans

Cause #4Cause #4International DepressionInternational Depression

World economies suffer because of WWIExports fall (other countries buy less

American products) More goods are left in warehouses and

prices fall Leads to massive unemployment

SPARKSPARKStock Market CrashStock Market Crash

The stock market rises dramatically throughout the 1920’s

People buy stocks on mere speculation (get in and get out fast)

This inflates stock prices Margin buying of stocks Market crashes on October 29, 1929 Black

Tuesday!

The Great Depression Last Until 1942