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Causes of the Great Depression
Transcript of Causes of the Great Depression
Start of the Great Depression- Stock Market Crash
October 24, 1929: "Black Thursday"- people begin to sell stock
October 29, 1929: "Black Tuesday"people dump their stock at any price
1. Republican Policies: (Presidents- Harding, Coolidge & Hoover)
only concerned with American business making profits
protected U.S. business with high tariffs
hurt other countries trying to pay off war debt
2. Speculation of Stock:
people assumed stocks would always go up
"buying on margin": paid a small portion (usually 10%) of stock down payment and borrowed the rest
3. Farming Overproduction
Farmers ramped up production for WWI and never readjusted afterword
More supply drove down prices, giving farmers less profits
4. Bank Failures
Banks invested in the stock market, people defaulted on their debts
People tried to pull out their money, and it wasn't there
No guarantees or insurance on banks (there is today)
President Hoover's Response
Hoover was a self made man, felt Americans could pull themselves out of it
caused other nations to stop trading with us
a. Unemployment rose to over 25%
b. By October 1930, 744 banks had failed and closed up shop
i. 9,000 US banks fail during the 1930’s
ii. $7 billion in citizens’ savings was lost