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Causes of the Great Depression1. The Stock Market/Banking (Financial Sector)By 1929, 4 million people (3%) owned stock People were buying stocks “on margin”Stock prices skyrocketed (due to over-speculation) but when prices fell there were more buyers than sellersBlack Tuesday, Oct 29th, 1929People lost entire savings in a dayMany banks closed (659 in 1929 and a6,000 in 1933 - causing more people to lose their money) “run on the banks”)By the middle of November, 1929 investors had lost $30 billion2. Overproduction in Industry and Agriculture (Business Sector)Businesses and farmers were producing more than people could buy, known as overproductionLoss of foreign buyers of agricultural and industrial productsCaused prices to drop dramatically To save $$$ businesses had to lower wages and/or cut jobs which led to unemployment and more poverty3. Foreign Problems (Foreign Sector)Economic collapses and inflation post WWI in EuropeHigh US tariffs caused European countries to not trade with US, trade war slowed economic prosperity in all nations4. Consumer Spending and Inequality (Household Sector)Many Americans were in severe debt from buying on credit/installmentsAs incomes fell, people bought fewer productsJobless workers could not buy anythingMost of America’s wealth was in the hands of very few people: In 1929, the top 5% of American households controlled 30% of the wealth Most Americans did not have enough disposable income to buy any more goodsPeople stopped purchasing goods when they owned enough of them, known as under consumption.5. Mistakes by the Government (Government Sector)TariffsHigh US tariffs caused European countries to not trade with USHawley-Smoot Tariff in 1930 raised interest rates to the highest level to protect US businessesFederal ReserveKept interest rates low during the 20s causing banks to make risky loans & leading businesses to make poor decisionsIntro Paragraph and Thesis PracticeDirections: In the space below, after reviewing the Causes of the Great Depression, and thinking of ways you could categorize these causes, write a 3-4 sentence intro paragraph setting the stages, including the “story” of economics, politics and society during the 1920s, and ending with a one sentence thesis answering the following prompt. For this prompt, use the “although/ultimately” formula and include THREE categories in the thesis.PROMPT: Analyze the causes of the Great Depression and evaluate the factors leading to a “bust” in the economy.______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ................
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