The Crash Occurs and the Great Depression Begins

1. What industrial weakness signaled a declining economy in the 1920s?        
Key basic industries (railroads, textiles, steel) only made a small profit. Railroads lost business due to competition from trucks, buses and personal automobiles. Mining and lumbering were no longer in high demand. Coal mining lost business from new forms of energy and the boo, industries of the 1920s (automobiles, construction and consumer goods) weakened.

2. What did the experience of farmers and consumers at this time suggest about the health of the economy?       
Agriculture was hit hard. Demand for crops fell after the war ended and prices fell by 40%. They increased production but were unable to sell everything they made, further lowering the prices. Farmers' income plummeted and many could pay off their debts.


3. How did speculation and margin buying cause stock prices to rise?      
People would just by something in hopes of making some quick cash and they would ignore all the risks (this was speculation). Buying on a margin was making a down payment and then borrowing the rest of the money. Easy money was available and trade was unrestrained. Rising prices didn't reflect the worth of their company. 


4. What happened to ordinary workers during the Great Depression?      
Many banks had to close down because they didn't have any money and people lost their entire savings. Millions of workers lost their jobs. Unemployment was at 25% and those who did have jobs had reduced pay and reduced hours.


5. How did the Great Depression affect the world economy?  

The Great Depression not only affected American economy, but also the world economy. Many countries had to deal with war debt, and Germany had to pay war reparations. The Great Depression worsened these things by limiting America's ability to import European goods, which made it difficult to sell American products to other countries.