Today we're continuing our blog discussion.
Causes of the Stock Market Crash
Speculators- in the stock market for a short amount of time.
Over Speculation- lead to high demand.
"Buying on Margin" -buying stocks on credit.
Banks had very low interest rates which made it very easy for people to get loans.
Stock prices were grossly inflated and did not have real value.
Federal Reserve increased interest rates so people would stop borrowing money from banks and tried to stop people from buying on margin.
Things like "pooling" were not regulated by the government which made the stocks look like the stocks were worth more than they actually were.
Effects of the Stock Market Crash
-Investors and businesses lose millions of dollars
-Thousands of banks fail and savings are wiped out the great depression sets in
-Businesses cut production and lay off workers
-Unemployment rises and people quit spending money.
-Depression spreads to Europe and other parts of the world.
Causes of the Great Depression
Overproduction of Goods- companies and factories are making too many products that weren't selling, causing them to lose money
Underconsumption of goods by consumers- people weren't buying things
Agricultural slump due to overproduction- farmers produced too many crops and struggled to make money.
High protective tariff policies of the 1920's- the goal of a high tariff is to get people to buy American goods. Designed to keep foreign competition out.
Taxes benefiting the rich, rich got richer, poor got poorer- lead to people not being able to buy things. Put burdens on middle and lower classes.
Stock Market Crash- fueled the Great Depression
Effects of the Great Depression
-New Deal programs start and makes the US government much larger
-Deficit spending starts (spending more than you take in)
-The New Deal creates many organizations that are still around today like social security system that helps the elderly
-Fascist, military and communist dictators come to power throughout the world like Adolf Hitler
Vicious Cycle of the Great Depression
-Companies lose money so they lay people off
-Unemployment rate goes up and less people buy goods as income has dropped
-Companies profits fall so they have to lay more people off or close
-Cycle repeats itself
Chapter 14 Test Topics
-- Causes of the Stock Market Crash
--Causes of the Great Depression
1. 1928 Election(466)- Republican Candidate: Herbert Hoover Democratic Candidate: Al Smith
Herbert Hoover Won. Republicans had been in the White House and the economy was booming
Al Smith was against prohibition
Al Smith was Catholic and there had never been a president that was Catholic.
2. Stock Market in the 1920's(466-468)
3. Story of the stock market crash-not the causes(467-469)
4. Banks and business' collapse(469)
5. Effect stock market crash had on other countries(469-471)
6. Depression in the cities(472-473)
7. Depression in the rural areas(473)
8. Dust Bowl(474)
9. Men in the Streets(475)
10. Women struggle to survive(475-476)
11. Children suffer hardships(476)
12. Social and psychological effects(477)
13. Hoover's background
14. Hoover's philosophy/Cautious steps(479)
15. Boulder Dam(480)
16. Democrats win 1930 Congressional elections(480)
17. Hoover takes action(481)
18. Bonus Army(482-483)
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