Causes of the 1929 Stock Market Crash and the Great Depression
The 1929 Stock Market Crash, Bank Failures and the Great DepressionCauses of Black TuesdayBuying stocks on marginOverexpansion of creditSpeculationBuying Stocks on MarginBuying on margin means to pay a small percentage of a stocks price as a down payment and borrowing the rest.Some purchasers were lent up to 75% of the stocks value.This worked as long as stock prices continued to rise.
Overexpansion of CreditWhen people are approved for credit that they should not qualify for.Speculation
Speculation The engagement of risky business transactions, on the chance of a quick or considerable profit.In this case, risky stock transactions artificially increased the value of the market. The Stock Market Crash of 1929October 29th, 1929 also known as Black Tuesday was the day the market hit rock bottom.A record 16 million shares were sold that day.This crash signaled the beginning of the Great Depression.
After the crash, Americans panicked and withdrew their money from banks.Many banks lent out more than they had in reserves so they could not cover their customers withdrawals.By 1933, 6,000 banks had failed.The Great DepressionThe period of severe economic decline between 1929 and 1941.
Main Causes of the Great DepressionAn old and decaying industrial baseA crisis in the farm sector greater supply than demandThe availability of easy creditAnd unequal distribution of wealth
The Effect of the Depression on Peoples Lives
People lived in Shantytowns called Hoovervilles.http://www.youtube.com/watch?v=GTnVMulDTYAPeople ate at soup kitchens and waited in bread lines.Many men abandoned their families and became hobos.A hobo was a person who rode trains from town to town.http://www.youtube.com/watch?v=NN_xvE79iXE
Relief during the Great DepressionIn the beginning of the Depression under President Hoover, only indirect relief was availableAssistance from private citizens or religious organizations.Under President Franklin Delano Roosevelt (FDR), the government started providing direct reliefCash payments or food provided by the government to the poor.