Causes of the Great Depression
Stock Market Crash of 1929
On October 29th, 1929, stock holders lost $40 billion. By the end of 1930, America was in a great depression
Bank Failures
In the 1930's over 9,000 banks failed. The surviving banks struggled to survive in the tough economy, and it was tough for new banks to start. This lead to less expenditures.
Reduction in Purchasing Across the Board
With the stock market crash and in fears of more economic problems, people stopped buying stocks because they didn't want to make a bad investment. This lead to less production from the workforce. People were unable to pay for things they needed so more of their needs began to accumulate. The unemployment rate rose to above 25%, which did not help the already poor economy.
American Economic Policy with Europe
The government created the Smoot-Hawley Tariff in 1930 to help American companies. A high tax lead to less trade between America and other countries.
Drought Conditions
Although it was not a direct cause of the Great Depression, it did not help the farming economy. It happened in the Mississippi Valley in 1930, when farmers couldn't pay their taxes so they had to sell their farms. This was more commonly known as the dust bowl.