Great Depression - demand was invested in the stock market...

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There were many causes of the Great Depression. In the years leading up to the Depression there are a number of factors that contributed to a great increase in stock market trading . The establishment of the Federal Reserve system in the US, decoupling the value of the dollar from gold and other international issues contributed to the collapse in markets that would ripple through the world financial center and result in widespread unemployment throughout the world. Another possibility is overproduction and under consumption. This was due to the fact that in the consumer sector there was not enough money to purchase the goods that were being supplied. Most of the benefit from this imbalance in supply over
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Unformatted text preview: demand was invested in the stock market , therefore adding to complicating problems. Bank collapses in rural sections of the U.S. were also a contributing factor. Farmers that were already in deep debt watched as farm prices began to plummet while their interest rates were skyrocketing. Over mortgaged land and low crop prices resulted in defaults on mortgaged loans and then the failure of many banks through the country. Additionally larger banks failed to maintain adequate reserves on hand to pay customers, and were risking a great deal of funds on the stock market. The bank system was perfectly positioned to tumble like the remaining dice in the years leading up to the 1929 crash....
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This note was uploaded on 03/29/2010 for the course HIS125 9021314933 taught by Professor Doreenpauley during the Fall '09 term at University of Phoenix.

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