Causes of the Great Depression
KEY CONCEPTS
• A number of major factors caused the Great Depression, among them
underconsumption and high protective tariffs.
• The extent of the economic collapse for the U.S. and the world was
unprecedented.
• President Hoover failed to stem the decline of the economy.
Ch. 32
#1 - Republican Economic Polices
A. Domestic
– Mellon Tax Plan (Andrew
Mellon)
• “trickle-down” economics
B. International
–
rise of protectionism
•
Hawley-Smoot Tariff
(June 1930)
#2 - Unequal Distribution of Wealth
• Gap between the rich
and poor
• 1% control 59%
• Income gains
• 60% live on or below median income
– affects
#3 - Overproduction
• Underconsumption
– Effect
• Technology
• Reduction in labor
#4 – Financial Institutions
• U.S. Banks
– fragility of the banking
system
• U.S. Stock Market
– Borrowing on margin
– Inflated stocks
– “Black Tuesday” (Oct. 29, 1929)
Global Depression
• Capitalist world
collapses
– Foreign debts
– Exports drops
Domestic Collapse = Bank Failures
Domestic Collapse = Business Failure
Domestic Collapse = Farmers and
Homelessness
Left-Side
“Chapter 32 Focus Questions”
• Answer Chapter 32 focus questions
#4 and #5 on the left-side of spiral