Presentation on theme: "The Great Depression Economic Disaster (1929-1941) Causes…"— Presentation transcript:
The Great Depression Economic Disaster ( ) Causes…
Overspeculation on stocks and buying on margin
The Stock Market Crash The summer of 1929 many thought the stock market boom might end and started selling stock By October more were selling Stock prices fell Those who had bought on margin were asked to put up the money Instead they sold their stock
The Stock Market Crash cont. Prices dropped more Black Tuesday-October 29, 1929-a wild stampede of selling Prices crashed until their were no buyers for the stock Many lost fortunes
Poor Banking Practices which lead to collapse of the banking system (The Federal Reserve did not act)
Bank Failures In the 1920s banks loaned large sums of money to investors When the stock market crashed investors (borrowers) couldn’t repay loans (they defaulted) Banks couldn’t give depositors their money when they came to withdraw Banks were forced to close (5,000 between 1929 and 1932) Many lost their life savings
High Tariffs on imported goods
Tariffs on Imports U.S. was charging high tariffs on imported goods to reduce competition with American factories This practice discouraged international trade Not only did it prevent Americans from buying cheap foreign goods but it reduced the foreign demand for American factory made goods which were in great supply.
Overproduction of goods on farms and in factories
Overproduction Farms and factories produced more goods than people could buy Wages did not rise as much as prices in the 1920s Workers couldn’t afford to buy all of the goods being produced
Downward Trend to Depression Stock Market crash ruined investors, therefore businesses couldn’t grow and expand Banks closed so businesses couldn’t borrow money Factories cut wages or made layoffs Unemployed workers didn’t have much money to spend.
Continued Downward Trend Workers bought less, therefore the demand for goods dropped More businesses went bankrupt And on, and on, and on … … …