Causes of the Great Depression
- Depressed farm production: The boll weevil and drought reduced the cotton production from the South. The farmers in the South, however, kept on planting cotton plants in hopes that the prices will rise and they could get out of debt.
- High tariffs: As businesses began failing, the government created tariffs to protect American companies. The Smoot-Hawley Tariff created a high tax on imports that led to less trade between America and foreign countries. This, like other tariffs created during the Revolutionary War and Antebellum Era, ended up causing consumers to pay artificially higher prices for manufactured goods.
- Industrial overproduction: Companies and factories were over producing and making too many products that they could not sell. This forced many companies and factories to slow production and lay off workers.
- Laissez-faire: This term is from French meaning "allow to do." Many Americans believed that economic problems will correct themselves if the government just left it alone.
- Poor banking practices: Before the Great Depression, the government didn't bother to oversee or regulate banks, so no person savings accounts in the banks were insures by the government. As people lost jobs and money in stock market investments, they couldn't repay loans the banks had given them. This caused many banks to go out of business and close.
- Over-borrowing (Personal Debt): When the Roaring 20s rolled in, Americans were eager to consume the new products developed. People were so caught up in spending and they started taking out loans to purchase stocks and land. Once the money was lost in the investments, they couldn't pay off their loans resulting in home and farm losing. People were buying things with money they didn't have.
- Stock market speculation: The stock market was not very well regulated. After Black Tuesday, many stocks bought were now worth less than the down payment people made originally. This forced people to sell off their stocks which caused the prices of stocks to decline.
- Unemployment: With so many factories and companies going out of business and closing, the unemployment rate was rising. Many people could only find part-time jobs and many faced major wage cuts. Others who were unemployed remained unemployed for a long time.
Impact of the Great Depression on Georgia
As the Great Depression wore on, Georgia suffered greatly. A typical Georgia family had no electricity or gas, no running water, no sinks or drains, and no indoor privies. Diets were inadequate. The poverty of some of Georgia's most rural counties even made minimal education standards impossible. There were few clinics, hospitals, or health care workers and some counties had no health facilities at all. Common sicknesses like malaria, tuberculosis, and pellagra spread.