1. How do we go from this to this…
By 1933, more than 9,000 banks had failed.
In 1932, 30,000 companies went out of business.
By million people out of 125 million were unemployed

2. We know the stock market was unstable…

3. Unstable Economy of 1920s
Income for the average American did not keep up with the amount they wanted to spend
Everything was purchased on installment plans
Banks loaned lots of money so people could buy, buy, buy
Businesses kept churning out more products
The rich kept getting richer
Businesses and banks speculated in the stock market
What was the problem???
Overproduction, decreased demand for goods inevitable, overextended people & banks
Multiplier effect
People could no longer buy bc not enough money OR already have durable goods/house, et cetera people overextend themselves going to start defaulting on loans businesses who anticipate too much business will start going undre THIS IS ALL NORMAL

4. This is all somewhat normal
Trough – economic term low point

5. Why the recession turned to a depression

6. Why did so many banks fail???
Bank speculation
People could not repay loans
Run on the bank

7. What happened when so many banks failed???
People lost all of their money
Less banks existed to loan out money/less money was in circulation
Many banks “called in loans” in fear of run and businesses then had to lay off workers and/or close

8. What was no one doing??? Spending money! Why was that significant?
Could we have sold more to foreign countries????
Trade/tariff wars
World wide depression

9. What caused the Depression?
crash