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The Causes of the Great Depression

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TwoWords BadWolf

on 29 April 2010

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Transcript of The Causes of the Great Depression

Chapter 11
The Great Depression Begins
1929-1932
Section 1:
The Cause of the Great Depression Essential Question:
What factors led to the Great Depression? Not so picture perfect.....
The Election of 1928 - "We are nearer to the final triumph over poverty than ever before in the history of any land."
-Herbert Hoover (R) vs. Alfred Smith (D)
-Quaker vs. Catholic
-Hoover won the election by a landslide
-One reason for Hoover's victory: The prosperity of the 1920's The Stock Market Soars -The optimism of the 1920's made the stock prices rise to new highs
-Investing because of the bull market
-Many engaged in speculation
The Great Crash -Fewer new customers and people selling their holdings
-Black Thursday: Oct. 24, 1929
-Black Tuesday: Oct. 29, 1929
-By November, $30 billion was lost which was equal to the total wages Americans earned in 1929 Banks Begin to Close -The stock market crash weakened the nation's banks in two ways:
1.) Banks loaned $6 billion to speculators
2.) Many banks invested depositors money
-Lost money and defaulted on loans
-Less credit available which helped send the economy in recession
-Many were making bank runs
-By 1932, 10% of the nation's banks had closed The Roots of the Great Depression -Uneven distribution of Income
-> Overproduction
-> Installment Plans
-> Slowdown on Retail Sales
-Loss of Export Sales
->Sold fewer good abroad
->Not making loans to foreign companies
->Failure of the Hawley-Smoot Tariff
-Mistakes by the Federal Reserve
->Failure to raise interests rates when the econonmy was healthy which lead to two ways it helped cause the Depression:
1.) Lower interest rates = Risky loans
2.) Lower interest rates = Belief that the economy
was still expanding
-> Once the Depression hit, the interest rates were raised which tightened credit

-The economy continued to spiral downward
Full transcript