The Market Crash and Banking Crisis
This section details how the stock market crash in 1929 occurred and its devastating impact on the American economy. Multiple factors contributed to the collapse:
Definition: Bull Market - A market characterized by optimism and rising share prices, which dominated the 1920s until the crash.
Key causes included:
- Overproduction of goods
- Land speculation, particularly in Florida
- Excessive stock market speculation
- Weak banking regulations
Vocabulary: Federal Reserve Board - The central banking system of the United States, which kept interest rates low at 3.5% in 1927.
Example: Between 1921-1928, approximately 5,000 banks went out of business due to poor regulation and risky investments.
The section concludes with the introduction of the Glass Steagall Act in 1933, which helped modernize the American banking system and stabilize the economy.
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