1. The Great Depression Begins

2. Chain Reaction of Economic Failures
1. Bull Market
Enticed buyers to buy on margin and pushed prices up without regard to value
2. Speculation
Buyers made risky stock purchases without regard to a company’s earnings and profits. People were betting on the bull market

3. Chain Reaction of Economic Failures
3. Stock Market Crash
Once professional investors sensed stocks were overpriced and began selling, panic selling and margin calls began. Then stock prices dropped
4. Bank Runs
Speculators could not repay loans to banks. Banks did not have cash reserves to fulfill the withdrawal demands. People panic and rush the banks for their money

4. Chain Reaction of Economic Failures
5. Bank Failures
Banks failed when they could not fill withdrawal demands. News of the failure cause other runs and more bank failures
6. Installment Debt
People bought expensive goods on installment plans. Paying off installments forced buyers to stop buying new things

5. Chain Reaction of Economic Failures
7. Mass Layoffs
Consumption fell as workers lost jobs -> Manufacturing slows down -> business failures -> layoffs
8. Hobos
Some people were so poor they became homeless. Men took to “riding the rails,” traveling, and performing odd jobs