THE GREAT DEPRESSION

The Great Depression began with the stock market crash of 1929 and was made worse by the 1930's Dust Bowl. President Franklin D. Roosevelt responded to the economic calamity with programs known as the New Deal.

5 CAUSES OF THE GREAT DEPRESSION.....

1) Stock Market Crash of 1929

-Many believe erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. It is one of the major causes that led to the Great Depression. Almost two months after the crash, around October, stockholders had lost more 40 billion dollars.

2) Bank Failures

- All throughout the 1930's over approximately 9,000 banks failed. Deposits were covered by insurance and as banks failed people lost their savings. This made the situation worse by leading less and less expenditures.

3) Reduction in Purchasing Across the Board

- With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. It then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed.

4) American Economic Policy w/ Europe

- As businesses began failing, the government created the Smoot-Hawley Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and Foreign countries along with some retaliation.

5) Drought Conditions

- While not a direct cause of the Great Depression, the drought that occurred in the Mississippi Valley in 1930 was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves.