1. Buying on Margin (BOM) - borrowing money from a broker to purchase stock
Installment Plans (IP)– payoff with equal payments over a period of time
Stock Market Crash - sudden dramatic decline of stock prices resulting in a significant loss of paper wealth
Calling the Loan – full repayment of loans

2. US: From Boom to Bust

3. 1920's - US had an artificial boom

4. US Companies continue producing goods at wartime levels
Expect good trade to continue

5. Farmers supply food for US military and people of Europe

6. Consumers Buy goods on installment plans
By end of decade - buying power decreasing

7. Stock Market

8. Many Americans buy stock in businesses

9. Often bought on credit on margin
RISKY - relied on further business growth

10. Increase in buying on margin led to increase in stock values
Promise of quick and easy money lured more investors

11. Surplus increases rapidly
Investors sell stocks
Stock prices decrease

12. Creditors demand payment for stock on margin
People can't make them

13. Investors sell off stock - withdraw money from bank to cover costs

14. 10/29/ Black Tuesday
Stock market crashes

15. Aftermath

16. Stock market losses/decrease in consumer demand leads to workers being laid off
Leads to more surplus

17. Layoffs increase/sales decrease
People go to banks to withdraw all of their money

18. Problem
Banks loaned most of the money
Money in bank was not protected

19. As people lose savings - banks start calling loans

20. Results in people losing homes
Unemployment and homelessness increase
Banks and businesses close