Six factors that probably contributed to the Great Depression

Causes of the Great Depression

1. High Tariffs (tax on imports) and war debts

a. Europe could not sell in the U.S.

b. Thus Europe could not buy U.S. products and

c. Europe had no money to pay its war debts (almost every country in Europe owed the U.S. money in war debts)

2. Unbalanced Economy

a. Some businesses paid out large profits and dividends

b. Wages and benefits for the workers did not increase

c. People could not afford the goods they produced

d. Rich people made gains - some used profits to expand (overextend)

e. Productions outstripped consumption 

3. Inconsistent Banking and Monetary Policy

a. No governmental control of Banking system

b. Bank failures were common (1929-1932, 5,000 banks failed, 9 million people lost their savings)

c. Banks overextended credit

4. Farm Crisis

a. Farmers had overextended to meet demands of WWI

b. European markets ended after WWI

5. Labor Unions were weak

a. Some unions were broken during strikes

b. The Government and the courts were anti-union

c. Unions were associated with the Red scare

6. Economists felt depression was a part of the business cycle (including Hoover)