Causes of the Great Depression

Study Notes

Causes of the Great Depression

Major factors include stock market crash, Hawley Smoot Tariff, Dust Bowl, bank failures, buying on credit, reduction in purchasing, and the gap between the rich and poor.

Stock Market Crash

Occurred on October 29, 1929.
Often mistaken as the entirety of the Great Depression; it was a significant trigger.
Estimated losses for stockholders exceeded $40 billion in two months.
Some market recovery occurred by late 1930, but it was insufficient to avert economic decline.

Buying on Credit

Installment buying became prevalent in the 1920s during economic prosperity.
Consumers purchased items like cars and refrigerators on credit, leading to significant debt.
When the market crashed, job losses prevented repayment of debts incurred through this system.

Bank Failures

Over 9,000 banks failed throughout the 1930s.
Bank deposits were uninsured, resulting in total loss of savings for many.
Surviving banks were hesitant to issue new loans, exacerbating economic downturn.

Gap Between the Rich and Poor

Wealth inequality increased significantly; the wealthiest 1% saw income rise by 75%.
The remaining population only experienced a 9% increase in income.
More than 70% of American families earned less than $2,500 annually.

Reduction in Purchasing

The stock market crash prompted individuals to stop spending.
Decreased production led to job losses; repossession of items bought on credit occurred.
Unemployment reached 25%, leading to further reduction in consumer spending.

Hawley Smoot Tariff

Enacted in 1930 to protect American businesses by imposing high tariffs on imports.
Resulted in a decline in international trade and strained economic relations with foreign countries.

Dust Bowl

Poor farming practices and overgrazing resulted in soil degradation.
Major droughts between 1926 and 1934 worsened conditions, culminating in dust storms.
Approximately 89 million acres of farmland were severely affected, forcing thousands to abandon their homes.

Depression Era Criminals

Financial losses fostered public resentment toward banks, leading to admiration for gangsters.
Criminal figures were seen as heroes in a struggling economy, despite their illegal activities.

John Dillinger

A notorious gangster who became a symbol of the era, known for his violent escapades in the Midwest.
Responsible for the deaths of 10 men, wounding 7, and orchestrating multiple bank robberies and jail breaks.

Bonnie & Clyde

Infamous duo whose crime spree captured national attention, culminating in their deaths on May 23, 1934.
Both were wanted for numerous violent crimes, highlighting the lawlessness of the time.

Description

This quiz explores the major causes leading to the Great Depression, including the stock market crash, bank failures, and the impact of buying on credit. Test your knowledge on the economic factors and events that shaped this critical period in American history.