The Great Depression

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The Great Depression
2
Causes

• 1. War debt. European countries either owed a
  lot of money for losing WWI (Germany) or they
  owed the U.S. a lot of money in loans to pay for
  WWI (Britain, France).

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causes

• Because all major world powers were so
  inter-connected, all it took was one to fail on
  payment and it would have rippling effects.

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causes

• When things started to get bad, the U.S. refused
  to make any more loans to foreign countries. That
  made it worse there, and less likely they would
  pay us back.

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causes

• 2. Overproduction of agriculture. Farmers were
  producing too many crops (in part due to better
  farming technology). There was too much supply,
  not enough demand.

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causes

• As a result, prices kept dropping. Eventually,
  farmers could not make enough money to pay their
  mortgages. Farms started to fail. Farming was
  still the backbone of many economies.

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causes

• 3. Unequal Distribution of Wealth. Only a few
  people were well off in the 1920s-most were
  struggling. The invention of credit did not
  help.

8
causes

• Factories and businesses were making too much
  stuff (the rich could only buy so much). When
  they realized this, they made major cut-backs
  (laid a lot of people off).

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causes

• As unemployment went up, less people could afford
  to buy things. So, businesses made more
  cut-backs. It was a vicious cycle.

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causes

• 4. Stock Market Crash. People thought the Stock
  Market was a sure thing. They bought stocks like
  crazyeven if they couldnt afford it.

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causes

• As soon as the crash happened, people panicked.
  They pulled all their money out of the stock
  market.

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causes

• People also pulled all their money out of the
  banks. Banks began to fail.

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causes

• 5. Protectionism. Countries placed high taxes
  on foreign goods (so people would buy products
  from home). However, it made things worse.

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causes

• Soon, all countries had similar taxes. So, for
  example, in America we wanted Americans to buy
  American products. We made foreign products more
  expensive.

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causes

• But, all other countries in the world put high
  taxes on American products. So, we were not
  selling enough overseas.

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causes

• Also, when European countries were short on
  money, they would not re-pay their loans to us.
  Again, we were all inter-connected.

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effects

• Unemployment sky-rockets
• Businesses Fail
• Farms Fail
• Banks Fail

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effects

• People lose confidence in capitalism and
  democracythey turn towards authoritarian
  leaders.
• Fascists
• Nazis
• World War II breaks out!