Download The Causes of the Great Depression

The Causes of the Great Depression
Chapter 18 Section 1
The Long Bull Market
 Herbert Hoover is elected president in 1928
 Bull market, when stock market experiences long period of
rising stock prices
 By 1929 10% of American households owned stocks
 Buyers engaged in speculation, betting market would climb
 Buyer then sold stock, making money quickly
The Great Crash
 Bull market lasted only as long as investors willing to put
money into stock market
 Last half of 1929, no more new customers
 Sept 1929 many started selling
 Stock prices fell sharply
 Oct 29, 16 million shares sold; market lost $10 to $15 billion
 By November, $30 billion lost
 Banks began closing
 Banks invested depositors’ money in stock market, hoping
for higher returns
Causes of the Great Depression
 Low Interest Rates – companies expanded more than necessary
 Overproduction – produced more goods than could be sold
 Uneven Distribution of Wealth – not everyone could afford goods
 High Tariffs – foreign demand for American goods restricted
 Falling Demand – production cut back, employees laid off
 Stock Market Speculation – encouraged by low interest rates