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credit

by 1929 the total number of purchases made with credit was 6 times higher than it was in 1915

purchases on credit in 1929 reached a total of $7 billion

the government encouraged this in the 1920s by keeping intrest rates low

they thought it would promote business by enabling consumers to buy goods when they didn't have money

this could have led to a depression when banks ran out of money to borrow and no one could by anything because of how in debt they were

banking crisis

the stock market crash provoked a major banking crisis

some banks were forced to close because they were so in debt because no one paid their loans back and because everyone was withdrawing the money they did have because of a rumor

fear of additional bank failures further aggravated this

costumers lost entire life savings when banks closed

between 1930 and 1932 more than 5000 banks failed

the 1930s crash of one bank in NYC wiped out some 400,000 depositers

business failures

many american businesses suffered on top of the stock market crash

costumers weren't able to buy their products

many companies trimmed inventories, scale back production schedules, and lay off employees

more than 26,000 businesses went bankrupt in 1930 and another 28,285 the next year

GNP- total value of all goods and services produced in a year

it reached $103 billion in 1929 and $56 billion in 1933

unemployment reached staggering levels which marked the beginning of the Great Depression

global depression

economic trouble in other places around the world like Europe was one of the factors that brought down the U.S. economy

massive war debts built up European countries

world trade rapidly declined during the late 1920s and the early 1930s

foreign consumers weren't able to purchase American goods, and some industries relied on trade

now there were high tariffs on imported goods

smoot-hawly tariff- highest tariff in U.S. history (to help American businesses) it eliminated the American market for foreign manufacturers and industries

made people buy American goods, not foriegn

income gap and consumer debt

between 1923 and 1929 the disposable income of the wealthiest 1% of Americans increased by 63%- rich got richer

income of the poorest 93% decreased by 4%- poor got poorer

meaning most people didn't have the buying power needed to boost the economy

people say if laborers and farmers made more the depression would have been less severe

got around income gap by paying with credit which economic chaos

no one could pay debts which made businesses crash

business cycle

free-enterprise economy- economic system with few government regulations

surplus- extra goods

business cycle: regular ups and downs of a business in a free- enterprise economy

industries increase production and hire more workers during prosperus times. industries then cut back on production and lay off workers.

but this Great Depression is not a part of the normal cycle.

stock market crash

banks and bankers gave out loans to people that had no money

allowed people to buy unmargin- only needed 10% of your own money for a loan

goes after the little man

when they ran out of money, they got $25 more million dollars to loan out

laissez faire- form of government, they had no say

people thought that in stocks you could not loose

stocks manipulated by pools- wealthy men strategy

What are the 3 main causes of the stock market crash?

Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.

What led to the stock market crash quizlet?

Solution. The stock market crash of 1929 happened because the share prices had been rising at an unsustainable pace in the years prior to the crash. This was due to the overconfidence of the investors in sustained economic growth as well as the practice of buying shares on the margin.

What were three causes of the Great Crash quizlet?

#1. Stock Market Crash. -Throughout the 1920s, people invested in the stock market in hopes of making money. ... .
#2. Banking Crisis. -People deposit money in banks for safe-keeping. ... .
#3. Overproduction. -Industry thrived in the 1920s because of mass production. ... .
#4. Under-consumption. -By 1929 the buying spree began to end..

What are 3 main causes of the Great Depression?

What were the major causes of the Great Depression? Among the suggested causes of the Great Depression are: the stock market crash of 1929; the collapse of world trade due to the Smoot-Hawley Tariff; government policies; bank failures and panics; and the collapse of the money supply.