Causes of the Great Despression

Question 1

black tuesday

Answer 1

• stock market crashed
• october 29. 1929
• business lose billions of dollars
• will help to trigger business shut downs
• over 16 million stock shares sold

Question 2

margin

Answer 2

• buying stock on credit
• “margin call” - you must pay up or lose all stocks, and possible personal possessions, in order to make up the difference of what you lost

Question 3

1930 - Hawley-Smoot Tariff

Answer 3

• tax on imports into the US
• farmers were losing money on crops
• all foreign goods were charged a higher tariff
• was supposed to help farmers by making Americans buy American products
• other nations immediately raise their tariffs on the US
• farmers can’t sell overseas (surplus of crops occur)
• farming crop prices go down further (farmers lose everything)
• highest tariff in modern US history

Question 4

easy credit

Answer 4

• people bought on credit at the store
• “put it on my tab”
• would pay when payday came
• as layoffs occur, people cannot pay off their credit
• the stores begin to close due to no one paying their credit owed

Question 5

remember this…

Answer 5

the stock market crash on black Tuesday is not the only cause of the depression. we have had worse days since that day on the stock market (see October, 1987)

many factors must click together to cause a great depression in society

Question 6

the key issue with the stock market crash was

Answer 6

most people bought their stocks on margin

Question 7

when someone buys on “margin” they are

Answer 7

using credit to buy stocks