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The Great Depression: 4 Causes & A “Spark”. Farming Unbalanced economy Credit crisis International Depression “Spark” Black Tuesday. Cause #1 FARMING. Overproduction of food for WWI then demand goes down after the war Inventions make farming easier
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The Great Depression: 4 Causes & A “Spark” • Farming • Unbalanced economy • Credit crisis • International Depression • “Spark” Black Tuesday
Cause #1FARMING • Overproduction of food for WWI then demand goes down after the war • Inventions make farming easier • Farmers borrow money to buy inventions (tractors, plows, seeders) • Price of food goes down • Farmers cannot make enough money to pay back loans
Cause #2Unbalanced Economy • The wealthiest 20% of the population had more money then the other 80%. • Poor and middle class people could not afford to buy consumer goods • Less goods sold means more goods left in warehouses/less workers needed • Leads to massive unemployment
Cause #3Credit Crisis • Too much installment buying during the 1920’s • People get into serious credit debt • Banks started to foreclose on people when they couldn’t repay their loans
Cause #4International Depression • World economies suffer because of WWI • Exports fall (other countries buy less American products) • More goods are left in warehouses and prices fall • Leads to massive unemployment
SPARKStock Market Crash • The stock market rises dramatically throughout the 1920’s • People buy stocks on mere speculation (get in and get out fast) • This inflates stock prices • Margin buying of stocks • Market crashes on October 29, 1929 Black Tuesday!
