Causes of the Great Depression

Economies always grow without downturns.

The 1920s peak was based on strong fundamentals.

Economies fluctuate, and the 1920s peak lacked strong fundamentals, making a downturn inevitable.

Wealth was evenly distributed among all Americans.

Farmers faced rising prices and increased demand

Factories underproduced goods

Wages kept pace with productivity

Factories overproduced and wages lagged behind productivity

It encouraged more exports from the U.S.

It caused other countries to retaliate with their own tariffs, reducing global trade.

It lowered taxes on imported goods.

It increased government spending.

People lost confidence in banks and withdrew their savings, causing bank failures.

Stock prices quickly recovered, so there was little long-term impact.

The government immediately intervened to stabilize the economy.

Most Americans did not own stocks, so they were unaffected.

Raising tariffs to protect domestic industries

Allowing banks to take bigger risks with savings

Increasing government spending to create jobs

Reducing international trade