A stock market crash is when stock prices go down way low, way fast. On “Black Tuesday”, October 29, 1929 the New York Stock Exchange went bad and stock prices started to fall. The prices fell for a full month. People started to panic and started to sell everything but no one was buying. This only made prices fall even faster and when people were selling they were only losing money. The Stock Market Crash of 1929 was one of the biggest events leading up to the Great Depression.
The Great Depression was the worldwide economic collapse where unemployment was high for a long time and many businesses failed.
There were many things that led up to the Great Depression but one of the biggest things was the Stock Market Crash of 1929. The Stock Market Crash happened on October 29, 1929. Stockholders lost more than 40 billion dollars two months after the original crash and by the end of 1930 the United States entered the depression. Another big cause leading up to the Great Depression were bank failures. Over 9,000 banks failed during the 1930’s. Bank deposits were being uninsured so banks failed and people lost their savings. The banks that didn’t fail became untrusting and didn’t give out many loans. This led to less spending. Reduction in Purchasing across the border was another cause. Because of the Stock Market Crash people from all classes stopped buying products. So then there were less things being produced and a reduction in the workforce. People started to lose their jobs and couldn't pay for things that they bought through installment plans and their things were being repossessed. The unemployment rate went above 25%. The American Economic Policy with Europe was also a cause. This was when the government created the Smoot-Hawley Tariff Act in 1930 to help protect some American companies. It raised tariffs to really high levels. It was supposed to help domestic farmers against agricultural production but when the war ended European started making more products. So this just caused higher taxes and Americans not being able to trade as much with foreign countries. Another smaller cause were drought conditions. The drought that happened in Mississippi Valley in 1930 made it so many people couldn't pay their taxes and debts. They ended up having to sell their farms and not getting the profit for themselves.Sources:http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm
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