The Stock Market Crash Ch. 21. From Boom to Bust Bank Runs Loss of customer savings Installment Plans Customer loans Stock Margins Buying on margin Using.

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Presentation transcript:

The Stock Market Crash Ch. 21

From Boom to Bust Bank Runs Loss of customer savings Installment Plans Customer loans Stock Margins Buying on margin Using stock to buy more stock-collateral Speculation Risky business loans Overproduction Businesses did not have money to pay for production. Caused unemployment

Contracting Economy An economic decline marked by a falling output of goods and services. Any contraction over a long period of time is called a depression. Cotton went from.19 cents to 6.5 cents a bushel 12 million unemployed (25% of workforce) GNP fell from $103 billion in 1929 to $56 billion in 1933.

Impact of Depression War reparations repaid by Allies to US were financed by Germany. US had implemented the Dawes plan to see German repayment of war reparations and US industries invested heavily with Germany. As investments by the US companies in Germany fell this caused Germany unable to repay war reparations to Allies, who in turn could not repay war loans to America. Industrial production fell by 40% in Germany, 29% in France and 14% in Great Britain.

Impact of Depression Hoovervilles Homes built in cities out of tar paper, metal and paper for unemployed and homeless Americans. The Dust Bowl Farming practices and wind storms (black blizzards) caused distress among Midwest farm owners. Penny Auctions Farmers bought neighbors farms for mere pennies and returned them to original owners Twenty-first Amendment Repel of prohibition in 1933, eight states continued the practice. (dry counties)