What is credit and why did it's availability contribute to the stcok market crash?

1. What is credit?
2. Why was credit so available?
3. What was credit used for?

Hysteria in the Farm Sector

1. The role World War I had on the farm sector
2. The role agricultural overproduction had on the farm sector
3. Role that farmers purchasing things with credit had on the farm sector (no correspondence with the Dust Bowl)

Reasons Behind the Falling Economy

1. Impact from low interest rates
2. Impact from manufacturing overproduction
3. Impact from uneven wealth distribution
4. Impact from high tariffs
5. Impact from a falling demand for goods

What is credit and why did it's availability contribute to the stcok market crash?

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Credit: noun the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. (Source: Oxford Dictionaries)

Other example: "Using a loan to buy something" (source: okhistory.org) A loan is where you are given money from someone with the expectation to pay it back.

If someone acquires a loan from a bank, the money to pay back actually increases becasue of the addition of something called interest.

Millions of Americans used credit to purchase many things, such as radios and cars.

The banks used credit in order to invest in stocks in the Stock Market, which meant that they earned a small profit for themselves.

This was all a lie, brought up by businesses that sold stock.

The result of all of these businesses and people using credit to invest in stocks, was that no one had enough money to pay back the loans.

This was one of the many causes of the Great Depression, and was also one of the biggest.

Because so many people invested in the Stock Market with credit, which definitely didn't help the fall of the economy, people had to sell the things that they had for a price that people can afford.

In other words, the prices and values of everything dropped because so many people lost so much money in the Stock Market, and were so deep in debt because of that on top of owing money to the failing banks, who also owed money because of credit invested in the Stock Market.

An example is the image of the man selling this car )nelow)

Image source: vintagenewsdaily.com

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A large amount of banks means that there is a large amount of loans.

Loans are another form of credit, but they build interest over time, meaning that the person who acquired the loan actually has to pay more than they did when they got the loan in the first place.

Also, for banks to gain business, they offered loans to cater to the wants of the public, which meant large loans for expensive things, which ultimately led to lots of debt.

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American people used credit to buy a large number of things, such as radios, cars, the newly-invented refrigerator, and washing machines.

Even the banks invested in the Stock Market using credit.

Unfortunately for America, everyone using credit meant that nobody had the money to pay back the money they owed.

Thus, an explosion in the amount of credit used and acquired was a large reason behind the Great Depression.

Hysteria in the Farm Sector

The amount of food required to feed approximately 4,355,000 US troops (Courtesy of Britannica.com) would have been astounding.

Because of World War I, the demand for food increased significantly, and so did the demand for farmers.

As a result of World War I, food was overproduced and farmers lost tons of money because of wasted food.

Sources (in order of appearance)