Social Studies - 2018-19
VUS.10b - Causes and Consequences of the Stock Market Crash
The student will apply social science skills to understand key events during the 1920s and 1930s by
b) assessing and explaining the economic causes and consequences of the stock market crash of 1929;
UNDERSTANDING THE STANDARD
The stock market experienced unprecedented growth in the 1920s, but serious flaws in the economy and the market itself led to economic collapse.
Causes of the stock market crash of 1929
Business was booming, but investments were made through buying stocks on credit.
There was overspeculation of monetary returns on investments.
There was a large number of small investors.
Panic selling of stocks led to the collapse of the stock market.
There was excessive expansion of credit.
Business failures led to bankruptcies.
Bank deposits were invested in the market.
When the market collapsed, the banks ran out of money.
Consequences of the stock market crash of 1929
The crash signaled the beginning of the Great Depression although serious flaws in the economy had existed for years.
People lost investments, which led to financial ruin, and many committed suicide.
Bank runs: Clients panicked and, attempting to withdraw their money from the banks, discovered their funds were lost.
There were no new investments.
Terms & Events
Stock Market Crash
Buying on Margin
Hawley-Smoot Tariff (Tariff Act of 1930)