WORLD HISTORY

Detailed explanation-1: -(1) The stock market crash of 1929 shattered confidence in the American economy, resulting in sharp reductions in spending and investment. (2) Banking panics in the early 1930s caused many banks to fail, decreasing the pool of money available for loans.

Detailed explanation-2: -Causes of Great Depression Tight monetary policies adopted by the Central Bank of America. Stock market crash of 1929. The failure of banks, which was the impact of the stock market crash as more people withdrew their savings from the banks leading to closure. Reduction in purchases due to diminished savings.

Detailed explanation-3: -Many were buying stocks on margin-the practice of buying an asset where the buyer pays only a percentage of the asset’s value and borrows the rest from the bank or a broker-in ratios as high as 1:3, meaning they were putting down $1 of capital for every $3 of stock they purchased.

Detailed explanation-4: -The widespread prosperity of the 1920s ended abruptly with the stock market crash in October 1929 and the great economic depression that followed. The depression threatened people’s jobs, savings, and even their homes and farms.

Detailed explanation-5: -Buying on Margin Margin buying during the 1920’s was not controlled by the government. It was controlled by brokers interested in their own well-being. The average margin requirement was 50% of the stock price prior to October 1929. On selected stocks, it was as high as 75%.