The Great Depression

Causes

Illusion of Prosperity

✿ Roaring 20’s✿ Depression Foreshadowed

_  More water (money)= faster and more efficient the wheel goes (economy)

_  Less water (money) = the wheel (economy) moves at a slow, sluggish rate

_  NO water(money) = the water wheel STOPS moving(economic depression)

_  Question: Where did the money go? Why did it “dry up”?

_  There are SIX main reasons….

_  Think of the US economy as a water wheel..

Six Causes

1. Speculation✿  A risky investment in the hope of

making a quick, large profit✿ Real Estate✿ Stock Market-✿ artificial value

2. Government Economic Policies

✿ Domestic- Laissez Faire✿ International-

✿  Loans✿  Tariffs

3. Overproduction

✿ Industry✿ Agriculture

4. Collapse of Stock Market and Banking Industry✿ Stock Market✿  Sept. 29✿  Oct. 24✿  Oct. 29- Black Tuesday

✿ Banking✿ Laissez Faire✿ Buying on Margin✿ Bad Loans✿ Runs

5. Toll on Farmers

✿ Overproduction ✿ Kick Them when they’re down✿ Dust Bowl✿ Oakies

✿ 1/3 of the US was in farming

6. Unequal Distribution of Wealth✿ Percentages✿ Debt✿ No Customers

Where did the Money Go?

_  Summarize why the economy failed in 1929_  (hint- Why wasn’t the economic wheel

spinning? How did money leave the system?)_  Cite 3 specific reasons