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The Great Depression *The Stock Market is based on confidence!

The Great Depression *The Stock Market is based on confidence!. Background: From 1920-1928 the US was in the middle of a very strong economy The US Stock Market was seeing huge gains People were making money on almost all stocks.

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The Great Depression *The Stock Market is based on confidence!

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  1. The Great Depression*The Stock Market is based on confidence! Background: From 1920-1928 the US was in the middle of a very strong economy The US Stock Market was seeing huge gains People were making money on almost all stocks. Investors went as far as borrowing money to buy stock – margin buying

  2. The Beginning of the Depression – The Market Collapse • On Wednesday October 23, 1929 the stock market began to fall. $5B was lost in five hours • Black Thursday – October 24, 1929. Investors abandon the market and prices plummet. Those who bought stock on the margin were in trouble • Some large bankers step in to stabilize the market, but this move is only temporary. Monday and Tuesday the market drops even more.

  3. The Stock Market crash wasn’t the on factor leading to the Depression Other factors leading to the Depression • Un equal distribution of wealth. A very small percentage of people controlled most of the wealth in the US. When they stopped spending it hurt everyone • High Tariffs – countries were trying to protect themselves and actually hurt themselves

  4. Overproduction in agriculture and industry – new methods increased productivity driving prices down. • Mismanagement of banks – lending money to individuals to by stock. • Runs on banks- banks were uninsured and as they failed people withdrew their money. This left less capital for businesses to borrow • Layoffs to save money – led to higher unemployment

  5. International crisis – the US economy was very important to the world-wide economy. As we struggled so did everyone else.

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