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Effects of the Crash

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Information about Effects of the Crash
Education

Published on March 5, 2014

Author: kbeacom

Source: slideshare.net

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“Black Tuesday”  October 29, 1929 

Only 2% of Americans had invested in stock market; but its crash effected most of the nation  Banks had loaned to high risk businesses; after the Crash businesses could not repay loans  Similarly, consumers could not pay for their loans from banks 

Widespread bank runs; banks could not get money fast enough to pay all depositors  Bank failures; 11K had disappeared by 1933  By 1933 the money from 9 million savings accounts had been wiped out  Businesses cut back on production & laid off workers  › Ford laid off 75K when it shut its Detroit factories  Consumers spent less and less › Less people spent money at restaurants, other luxuries

 Farm prices fell › Bushel of wheat in 1929=$1.18 › Bushel of wheat in 1932=$0.49 By 1932 there were 12 million out of work; ¼ of the workforce  GNP fell from $103 billion in 1929 to $56 billion in 1933 

      U.S. was world’s leading economy; soon other countries felt the strain American investments in Germany decreased dramatically German banks failed & Germany suspended its reparations The Allies stop paying their debts Production quickly decreased in European countries Europeans no longer bought American goods

Great Depression=Most severe economic downturn in U.S. history; 1929-1941  Crash did not cause Depression; both were the result of the country’s previous economic troubles  › Wealth was distributed unevenly › Production surpassed consumer demands › Overspeculation in the stock market › In 1929 the Fed Reserve limited the money supply; to little money in circulation to help economy recover

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