Chapter 30: The Great Depression

Chapter 30: The Great Depression

• Chapter 30 - Great Depression
• Chapter 30: Great Depression
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• Caption: Know this: Shaky Stock Market Causes Bank Crises, Too Much For Sale Too Little to Spend, Gov. Actions Makes a Bad situation Worse

Shaky Stock Market Causes Bank Crises

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• Caption: Bank Runs Resulted from Stock Market Crash. Bank looked like an unsafe place to keep money. Due to bad lending on their part.
• Promise of Financial Gain: Speculative and Enthusiasm in Stock market. -Bull Market and Buying on Margin resulted.
• After Black Tuesday, Bear Market -Bank Runs

Too Much For Sale Too Little to Spend

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• Caption: Overproduction and Underconsumption
• Industries used the assembly-line method of mass production
• Overproduction resulted -Companies overproduced because they could.
• By 1929, buying spree coming to end -Everyone had bought what they needed or already wanted by then.
• Underconsumption was a result of debt and lack of necessity in materials -Unemployment resulted from underconsumption
• Underconsumption affected Farmers first -After WW1 Consumptions of Products decreased and prices dropped

Gov. Actions Makes a Bad situation Worse

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• Caption: Federal Reserve and Congress blamed for bad actions
• Federal Reserves controls nation's money supply -One way of doing this is by setting discount rate
• Before Stock Market, Feds kept rates low to keep money circulating through economy
• 1931, began raising discount rates -Turned recession into an economic calamity
• Congress Passed Hawley-Smoot Tariff Act -Triggered a trade war that ended up causing the Great Depression to spread around the globe.