Module 1: Causes of the Great Depression

Essential Questions

Why are some people rich and other people poor?

Is the economy fair?

What role should a government play in its citizens' economic welfare? 

The Causes of the Great Depression

The Great Depression, which began in 1929, was caused by a confluence of factors that severely disrupted the global economy. One of the primary triggers was the stock market crash in October 1929, which wiped out millions of investors and undermined consumer confidence. This event was exacerbated by overproduction in industries, leading to a surplus of goods that drove prices down and resulted in widespread layoffs. Additionally, banking failures, fueled by speculative lending practices and a lack of regulation, led to a contraction of credit and further reduced consumer spending. Internationally, the imposition of tariffs, such as the Smoot-Hawley Tariff, stifled trade and worsened economic conditions worldwide. Together, these elements created a devastating cycle of unemployment, decreased production, and plummeting demand, which characterized the Great Depression.