American History Chapter 15: Crash and Depression

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American History Chapter 15 Crash and Depression

• I. The Stock Market Crash

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Objectives

• Learn about events that led to the stock markets
  Great Crash in 1929.
• See how the Great Crash produced a ripple effect
  throughout the nations economy.
• Become familiar with the main causes of the Great
  Depression.

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Bell Ringer

• What would happen if you went to your bank and
  asked to withdraw money from your savings account
  and were told that there is no money.
• What might cause that situation?
• What options would you have?
• What do you know about the Great Depression.
  (page 508)

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A) The Market Crashes

• Dow Jones Industrial Average an average of
  stock prices of major industries
• September 3rd all time high 381 /8018
• Stock prices were higher than what they were
  worth
• Black Thursday Oct 24 dropped 21 points in
  last hour GE 400 283
• Black Tuesday Oct 29th record number of stocks
  sold the great crash
• Great Crash collapse of the stock market
  381-198 30 billion in losses
• Business cycle the periodic growth and
  contraction of a nations economy

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B) The Ripple Effect of the Crash

• At first only investors hurt did trickle down
• Risky loans hurt banks with the crash the
  business lost could not repay
• Consumer borrowing people borrowed to buy
  things loans recalled
• Bank runs people rushed to get money out of
  banks called in loans business that were hurt
  couldnt pay
• Bank failures banks that couldnt pay went
  broke
• Savings wiped out when banks went so did
  savings
• Cuts in production cant borrow to expand,
  nobody had money to buy anyway
• Rise in unemployment
• Further cuts in production unemployment grew
  and incomes shrank consumers spent less and
  business produced less

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• Economic Contraction decline marked by falling
  output of goods and services long one is called
  a depression
• Great Depression most severe economic downturn
  in the nations history
• Factories closed small business next farm
  prices fell 1932 25 of work force unemployed
  GNP dropped in half
• World nations interdependent US quit investing
  in Germany Germany suspended reparation
  payments Alias quit repaying war loans to US

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C) Underlying Causes of the Depression

• An unstable economy most money in the hands of
  few rich not consumers/ industry produced more
  than could be bought/ Farmers and workers not
  getting money
• Over speculation people bought stocks and used
  those stocks as collateral to buy more money is
  all borrowed, not there
• Government polices the FED did not lower
  interest rates after crash to increase money
  supply

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Review

• What events led to the stock markets Great Crash
  in 1929.
• Why did the Great Crash produce a ripple effect
  throughout the nations economy?
• What were the main causes of the Great Depression?