Causes of the Great Depression

credit

is the ability to borrow money or access goods or services with the understanding that payment will be made later. Excessive use of credit during the 1920s contributed to the economic instability that led to the Great Depression.

uneven distribution of wealth

refers to a disparity in the allocation of income and assets among individuals or groups in society. This factor created economic imbalances that intensified the severity of the Great Depression.

overproduction

occurs when the supply of goods exceeds demand, leading to unsold inventory. This was a significant factor in the economic downturn during the Great Depression.

Smoot-Hawley Tariff Act

a 1930 law that raised tariffs on imported goods to protect American industries but ultimately worsened the Great Depression by stifling international trade.

Stock Market Crash

refers to the dramatic decline in stock prices in October 1929, marking the beginning of the Great Depression. This event led to widespread panic, bank failures, and a significant decrease in consumer spending.

Banks Close

refers to the widespread shutdown of banks during the Great Depression, which resulted from bank runs and insolvencies, further exacerbating the financial crisis.

Federal Reserve

the central banking system of the United States, responsible for regulating the money supply and interest rates. Its policies during the late 1920s and early 1930s have been criticized for worsening the Great Depression.