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The Causes of the Great Depression Chapter 18 Section 1 The Long Bull Market Herbert Hoover is elected president in 1928 Bull market, when stock market experiences long period of rising stock prices By 1929 10% of American households owned stocks Buyers engaged in speculation, betting market would climb Buyer then sold stock, making money quickly The Great Crash Bull market lasted only as long as investors willing to put money into stock market Last half of 1929, no more new customers Sept 1929 many started selling Stock prices fell sharply Oct 29, 16 million shares sold; market lost $10 to $15 billion By November, $30 billion lost Banks began closing Banks invested depositors’ money in stock market, hoping for higher returns Causes of the Great Depression Low Interest Rates – companies expanded more than necessary Overproduction – produced more goods than could be sold Uneven Distribution of Wealth – not everyone could afford goods High Tariffs – foreign demand for American goods restricted Falling Demand – production cut back, employees laid off Stock Market Speculation – encouraged by low interest rates