Drag the events that led to the Great Depression in order
Here is the order of events that led to the Great Depression:
1. Stock Market Crash (October 29, 1929): Also known as "Black Tuesday," this was a major stock market crash that marked the beginning of the Great Depression. Stock prices declined sharply, leading to panic selling.
2. Overproduction and Underconsumption: Throughout the 1920s, industries experienced a period of rapid growth and overproduction, leading to a surplus of goods. However, consumers' purchasing power did not keep up, resulting in a decline in demand and a cycle of underconsumption.
3. Unequal Distribution of Wealth: The 1920s was a boom period for the economy, but much of the wealth generated went to the top 1% of the population. The majority of Americans did not benefit from this prosperity, which contributed to a decline in aggregate demand.
4. Decline in International Trade: The global economy was interconnected, and as the United States implemented protective tariffs (such as the Smoot-Hawley Tariff Act of 1930), other countries retaliated with their own tariffs. This led to a reduction in international trade, diminishing markets for American goods and exacerbating the economic downturn.
5. Banking Crises: The United States experienced a series of bank failures throughout the 1930s. Many banks had invested heavily in the stock market and, when it crashed, they faced significant losses. Panicked depositors rushed to withdraw their money, causing a wave of bank runs, closures, and loss of savings.
6. Monetary Policy and the Federal Reserve: In the early 1930s, the Federal Reserve tightened monetary policy and restricted the money supply to combat stock market speculation. However, this decision unintentionally led to a contraction of credit and a lack of available funds for businesses, worsening the economic situation.
7. Collapse of the Farming Sector: Agricultural prices began to decline in the 1920s due to overproduction, falling demand, and drought conditions in the Midwest. Many farmers faced bankruptcy and foreclosure, adding to the economic hardship.
8. Government Policies: The Hoover administration, at first, believed that the economy would recover on its own and did not intervene significantly. This limited government involvement delayed necessary relief measures, exacerbating the crisis and public discontent.
Overall, these events created a perfect storm that resulted in the prolonged and severe economic downturn known as the Great Depression.