2. Causes
• grossly inflated stock projections
• buying stocks on credit
• increased spending on credit
• massive simultaneous stock
withdrawals
• massive bank withdrawals
3. International Effects
• U.S. owned much of world’s debt
• Germany – hyperinflation, high
unemployment
• Japan – forced banks to close
• Great Britain – decreased spending,
high unemployment
4. U.S. Responses
• Smoot-Hawley Tariff Act
– backfired
• increased government spending
• New Deal
– public works programs
– money for welfare programs
– new regulations protecting banks and
the stock market