OCTOBER 29, 1929: BLACK TUESDAY The day the stock market collapsed The Great Depression OCTOBER 29, 1929: BLACK TUESDAY The day the stock market collapsed

Causes of the Great Depression Over speculation Buying and selling in hope of making a quick profit. Land prices went up quickly. Installment buying Investors paid a small part of the stock’s price and borrowed the rest. When investor’s sold the stock they repaid the loan and kept the profit until…the prices fell, and borrowers could not repay their loans. Excessive borrowing Stocks are certificate of ownership in a company. High Tariffs (tax on imports) Kept foreign goods out of America. American goods became unaffordable to the consumers.

Federal Reserve In 1913, the Federal Reserve Act created… A more flexible currency system by allowing banks to control the money supply. To raise money the Federal Reserve lowers interest rates that it charges to banks and banks borrow more money to lend to people and businesses. During the 1920s the Federal Reserve took no action to control the money supply which led to weakened banks and economy.

Great Depression effects Economy severely weakened by the nation’s banks. Led economy into a recession 1932; Depression worsens. High unemployment, 25% Homelessness continued to rise. Hungry mobs lined up at breadlines and soup kitchens.

Decline in Farm Income Dust Bowl Farmers in the Plains affected. 1932; Drought struck the region causing a loss of crops Dust storms Many farmers moved west to California but remained homeless and impoverished Land prices went up forcing farmers to borrow money to pay land loans. Many farmers will lose their farms during the depression because of inability to pay their loans