Causes of SMC (Bruns)
- Over speculation- They are in it for a shorter term; they want a quick profit from buying stock. They drive stock prices up. They weren’t
- Overproduction of goods
- Buying on margin- caused more common people to get into the stock market
- Uneven distribution of wealth
- Too much borrowing from banks
- Stock prices were grossly inflated, didn’t have real value****-
- Federal Reserve increased interest rates- set up 12 federal banks around the country. It backs up banks when they lose money. Right at the end of the 20’s, they started raising interest rates and it led to people stop borrowing and buying and it crashed.
- Lack of government regulation
Effects SMC
- People lose money
- Banks fail
- Businesses close
- Unemployment increases- people quit spending money
- Spreads to other countries
Causes of GD
- Overproduction of goods
- Under consumptions of goods by consumer
- Agricultural slump due to overproduction
- High protective tariff
- Taxes benefiting the rich- rich got richer and the poor got poorer
- Stock market crash
Effects of GD
- New Deal programs start- the government gets much larger
- Deficit spending starts- government started spending more money than we took in; nobody wants to cut people of work or raise taxes.
- The new deal creates many organizations that are still around today-social security, welfare, FDIC, SEC
- It brought about the military dictators like Hitler
- Older generatins ost trust in banks and don’t spend as much
- Fascist, military and communist dictators come to power throughout the world.
Cycle of GD:
- Companies lose money so they lay people off
- Unemployment rate goes up and less people buy goods
- Companies profits fall even more so more people get laid off
- Cycle repeats
Bonus Army
- WWI veterans just wanted their check that they were promised
- They were denied it by congress so people protested
- Military had to force people away when they started to riot; this made Hoover look even worse
Okies= people who left because of the dust bowl
Hoover said…”we shall soon with the help of God be in sight of the day when poverty will be banished from this land.”
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