Presentation on theme: "DESCRIBE SOCIAL AND ECONOMIC CONDITIONS FROM THE 1920S THROUGH THE GREAT DEPRESSION REGARDING FACTORS LEADING TO A DEEPENING CRISIS, INCLUDING THE COLLAPSE."— Presentation transcript:
DESCRIBE SOCIAL AND ECONOMIC CONDITIONS FROM THE 1920S THROUGH THE GREAT DEPRESSION REGARDING FACTORS LEADING TO A DEEPENING CRISIS, INCLUDING THE COLLAPSE OF THE FARMING ECONOMY AND THE STOCK MARKET CRASH OF 1929. COS Standard 6
CHAPTER 22 SECTION 1 Assessing effects of overproduction, stock market speculation, and restrictive monetary policies on the pending economic crisis
Overproduction More efficient machinery led to overproduction of goods. Americans could not afford to buy all the goods produced. Low consumption of goods led to economic problems. Workers wages did not increase fast enough to keep up with the production of goods. Sales decrease, workers were laid off; further hurting the economy. Many Americans bought items on installment plans. Paying off the debts left little money to purchase other goods.
Stock Market Speculation The stock market was established for people to buy and sell shares of companies. Long period of rising stock prices is known as a bull market. As the bull market rises, investors bought stock on margin (small cash down payment). It is safe as long as stock prices rise. If they call, a broker can issue a margin call, which demands the investor to repay the loan immediately. People began speculating in the 1920s, because they bet on the market climbing and sold whatever stock they had in an effort to make a quick profit.
Stock Market Crashes Lack of new investors caused the stock prices to drop and the bull market ended. Stockbrokers advised their customers of the margin call, investors placed stock up for sale. The stock market plummets further. On October 29, 1929, stock prices fell drastically. This day became known as Black Tuesday.
Stock Market Crashes Stock market crash does not cause Great Depression, but hurts the economy. Banks are weakened. Banks lose money and bank runs resulted. If a bank runs out of money, the bank will have to close. Many people took their money out of the banks, many banks collapsed.
Money There was an uneven distribution of wealth in America.