Chapter+25+Causes+of++the+Great+Depression

= The Great Depression was caused by many different factors including: =
 * Stock market boom between May 1928 and Sept. 1929 was followed by a huge crash in October 1929[[image:black_tuesday_22.jpg align="right"]]
 * October 29, 1929 ( [|Black Tuesday] ) the market failed when sixteen million shares were traded, industrial index dropped 43 points so stocks became worthless
 * Lack of Diversification
 * prosperity of economy depended on only a few industries (construction and automobile) these industries declined and the new ones (petroleum, chemicals and plastics) had not developed enough to compensate
 * Unequal Distribution of Wealth
 * Demand did not keep up with supply
 * industrial/agricultural production increased but the proportion of profit that went to farmers, workers, and other potential consumers was not large enough to make market for goods that were being produced
 * 1929 more than half of American families lived on edge or below minimum subsistence level
 * Credit Structure
 * [|farmers] were deep in debt because crop prices were too low to pay for what they owed
 * small banks were always in trouble in the 1920s because costumers depend on loans
 * many small banks failed[[image:nobody_knows_you.jpg width="274" height="274" align="right"]]
 * larger banks were also in trouble because some invested recklessly in the stock market
 * Declining Exports
 * European demands for American products declined in the late 1920s
 * caused by growing European industries/agriculture and some European nations suffering economically after WWI
 * high American protective tariffs made it hard for Europeans to sell goods in American markets
 * Unstable International Debt Structure
 * after WWI European nations allied with US owed a lot of money to the American banks but these amounts were too large to be paid without breaking their economies
 * Germany and Austria were to pay reparations but were unable to do so
 * caused European economy to become destabilized
 * Although US govt. refused to forgive/reduce any debts the banks made larger loans to European govts. to pay off their earlier loans (debts/reparations paid by creating more and more debt)

Sources/ More information: textbook, AMSCO, [|The Great Depression]