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1929-1939 OBJECTIVE: you will be able to identify the main causes of the Great Depression. 1. Overproduction 2. The Stock Market Crash of 1929 3. Banks Fail • Factories and farms produce more goods than people can buy (Overproduction) • After WW1 many countries no longer can afford American goods RESULTS: a. Prices of goods drop (goods were cheaper) b. Workers began to get laid-off (fired) b. Companies Shut Down c. Farmers have to sell their farms rubber steel oil The following industries suffered as a result of the failing car industry: glass construction (roads and bridges) housing (as the suburbs grew) paint What do I need to know about the Stock Market? • The stock market is a place where stocks and bonds are "traded" – meaning bought and sold. • Stock - units of ownership in a company. Why would a company sell stock?? TOO MAKE MONEY!!! Stock Market in the 1920s • • In the 1920s, Americans bought stocks in hope of getting rich The economy is improving, and people assume it will continue to do well • Some Americans bought Stock on Margin: They borrowed money from their bank and used that money to buy stock (overspeculation) Summer of 1929 • • The value of stocks started to fall, so people got nervous and began to sell their stocks Stock Market Crashes: “Black Tuesday”: Oct. 29, 1929 • Value of stock plummets • People lose all of their savings • People who over speculated could not pay back the bank. • Banks had loaned money to people who invested in the stock market. • When the market crashed, people could not pay their loans and the banks could not give depositors their money. •As a result, many banks closed down and many families lost their life savings. • 40% of banks closed in the 1930s