Causes of the Stock Market Crash of 1929. Depression : Period of severely reduced economic activity characterized by rise in unemployment.

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Causes of the Stock Market Crash

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Causes of the Stock Market Crash of 1929

Depression : Period of severely reduced economic activity characterized by rise in unemployment

1. Overproduction Industry made more goods than most consumers wanted or could afford

2. Unequal distribution of wealth: Company profits rose in 1920s but wages were NOT increased as much Lack of purchasing power

The rich got richer & the poor got poorer Most $ in hands of few who saved rather than bought

Overproduction No purchasing power +

3. Overextension of credit: Too much installment buying BUY NOW!! Pay Later

4. Economic troubles abroad Banks don’t have the money to lend to Europe any more.. Even with all the post war problems

Highest tariff ever Hawley-Smoot Tariff 1930 Other countries raised tariffs as well & world trade fell over 40%

Europe buys less U.S. goods (American companies make less money) + Hawley-Smoot Tariff Less $$$ going to Europe

Tax policies of Andrew Mellon: Rich people & corporations were not paying as much income tax 5.

6. Fear: Panic swept due to market crash

7. Overspeculation: THINK You buy stocks you THINK will rise in price Example: Buying a stock in Apple BEFORE the iPhone and iPods reached the market. That would have been a smart investment!

8. Government Policies There was not enough $$$ in circulation to help economy recover after the stock market crashed

3 Reasons for the stock market crash + 8 other American Factors THE GREAT DEPRESSION