CAUSES OF THE GREAT DEPRESSION Objectives  Describe the characteristics of the 1920’s stock market  Identify the causes of the Great Depression.

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Presentation transcript:

CAUSES OF THE GREAT DEPRESSION

Objectives  Describe the characteristics of the 1920’s stock market  Identify the causes of the Great Depression

Causes of The Depression I. Stock Market A. Problems: 1. Margin (borrowing) 2. Speculation (guessing) B. Turning Point: 1. Oct. 21 st – Oct. 29 th *BLACK TUESDAY a. $30 billion lost

In order to protect loans made by stockbrokers to investors who bought stocks on margin, brokers could issue a  a. collateral.  b.speculation call.  c.margin call.  d.foreclosure.

October 29, 1929, the day when stock prices took the steepest dive of that time, is known as  a. Black Thursday.  b.Black Tuesday.  c.Bloody Monday.  d.Panic Tuesday.

Banks in Tailspin II. Bank Failures A. Structure of Banks 1. No separation between savings/investment banks a. Banks would invest savings to maximize bank profits B. Bank Runs 1. 10% of nations banks close

For some banks, the losses they suffered in the crash were more than they could absorb and they were forced to  a. increase interest rates  b.approve more loans.  c.attract more depositors.  d.close.

Overproduction III. Overproduction A. Uneven Wealth 1. 5% owned 30% of nations wealth B. Buying on Credit/Installments IV. Economic Isolationism A. Overseas investing B. Hawley-Smoot Tariff - export trade

In 1929 the top 5 percent of all American households earned 30 percent of the nation’s income, which is  a. an uneven distribution of wealth.  b.supply-side economics.  c.a bull market.  d.a recession.

What severely dampened commerce on both sides of the Atlantic and intensified the Depression in the United States?  a. the bull market  b.the Federal Reserve  c.Black Tuesday  d.the Hawley-Smoot Tariff

Federal Reserve Mistakes V. Mistakes by Federal Reserve A. Interest rates fueled: 1. Risky bank loans 2. Buying on Credit 3. Speculation in Stocks 4. Companies to take loans to expand businesses