1. 9-2: The Great Depression
The stock market boom and optimism of the 1920s were generated by investments made with borrowed money. Once the stock market collapsed, the resulting Great Depression caused widespread hardships.

2. Stock Market Crash Causes Expansion of Credit Overspeculation
Access to easy credit (borrowed money) was excessively expanded in the 1920s
Overspeculation
Businesses were booming, but investments were made with borrowed money

3. Stock Market Crash Causes Business Failures Bank Failures
Stocks lost value
Prices fell
Production slowed
Unemployment increased
Businesses and individuals went bankrupt
Bank Failures
Bank deposits were also invested in the market
When the market collapsed, the banks had no money

4. Stock Market Crash Consequences Run on the Banks No new investments
Clients panicked and attempted to withdraw their money from the banks
Banks had no money to give
No new investments
Fear of risking money
No new investments made
Economy could not grow

5. Causes of the Great Depression
Stock Market Crash
Borrowed money could not be repaid
Federal Reserve
Central banking structure, failed to prevent widespread collapse of the nation’s banking system in the late 1920s and early 1930s
Severe contraction in the nation’s supply of money in circulation

6. Causes of the Great Depression
Protective Tariffs
High protective tariffs (Tariff Act of 1930, aka Hawley-Smoot Act)
Produced retaliatory tariffs in other countries that strangled world trade
Dust Bowl
A drought in the Great Plains severely limited farmers’ abilities to earn a profit
Many lost their homes to foreclosure

7. Effects of the Great Depression
Unemployment
Foreclosures/homelessness
Collapse of financial system (bank closings)
Demand for goods declined
Political unrest—growing militancy of labor unions
Migration

8. What caused the stock market crash of 1929?
What were the causes of the Great Depression?
What were the consequences of the stock market crash of 1929?
How did the depression affect the lives of Americans?