Causes of the Great Depression
Siužetinės Linijos Tekstas
- Overproduction - Industry
- Overproduction - Farming
- Speculation
- Industries that suffered the most included agriculture, mining, logging, durable goods, construction, and automobiles. The depression caused major political changes including President Herbert Hoover's loss in the presidential election of 1932 to Franklin Roosevelt.
- Buying on Margin
- Too many crops result in price decline. As a result farmers cannot repay their debts and lose their farms.
- Shaky Banking
- Rampant speculation led to falsely high stock prices, and when the stock market began to tumble in the months leading up to the October 1929 crash, speculative investors couldn't make their margin calls, and a massive sell-off began
- Restrictions on International Trade
- Buying on margin helped bring about the Great Depression because it helped to cause Black Tuesday when the stock market crashed.
- By the end of the decade, more than 9,000 banks had failed. Surviving institutions, unsure of the economic situation and concerned for their own survival, became unwilling to lend money.
- During the Great Depression, America embraced a policy of protectionism, using trade restrictions to try and strengthen American products with legislation like the Smoot-Hawley Tariff Act of 1930.
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