Causes of the Great Depression Flashcards
Which profits were lagging behind, and what was the effect
Agriculture profits were lagging behind industrial profits, caused food prices to plummut
Wages in the 1920s
Were not keeping up with prices, fewer workers could afford things
What caused public debt?
Buying on credit
What was national income invested in
Risky enterprises
Buying stock on margin
Using borrowed money created a boost in returns, but it made it a lot more risky
How many banks?
25,000
Why were banks weak
Very few branches, as many of them were small and independent
Failure rate of banks in the 1920s
500/year
What were most loans for
Risky stocks and real estate
Tariff Walls
Designed to make imports more expensive than domestically produced products
Hawley Smoot tariff
Designed to help american farmers, it raised already high import costs by about 20%. Countries retaliated by increasing their own tariffs on American goods. Global trade plummeted
Europe in the 1920s
the Versailles treaty was a disaster which negativly affected the economy. There was a chain reaction of Bank Failures
How were the farmers doing
Overproducing food since WWI
Many were in debt because they had invested in new farm equipment
McNary-Haugen bill
A farm-relief bill that was championed throughout the 1920s and aimed to keep agricultural prices high by authorizing the government to buy up surpluses and sell them abroad. It got vetoed by Calvin Coolidge
Stock Market Crash
Symptom, not a cause, but it did lead to unemployment
