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Topic: The Stock Market Crash

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Topic: The Stock Market Crash AIM: Why did the Great Crash produce a ripple effect throughout the nation s economy? – PowerPoint PPT presentation

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Title: Topic: The Stock Market Crash


1
Topic The Stock Market Crash
  • AIM Why did the Great Crash produce a ripple
    effect throughout the nations economy?

2
The Market Crashes
  • Before the panic in October, most people saw no
    reason to worry
  • Dow Jones Industrial Average ? average of stock
    prices of major industries
  • Rising stock prices dominated the news
  • Prices for many stocks soared far above their
    real value in terms of companys earnings and
    assets

3

Causes of the Great Depression
I. Stock Market Crash
  • On Tuesday, October 29, 1929, stock prices
    plummeted.
  • This became known as Black Tuesday.

4
Black Thursday
  • After peak in September, stock prices slowly fell
  • Some brokers began calling in loans, but others
    continued to lend even more
  • Wednesday, October 23 ? Dow Jones average dropped
    21 points in an hour
  • Thursday, October 24 ? worried investors began to
    sell and stock prices fell
  • Business and political leaders told people not to
    worry

5
Black Tuesday
  • Investors all over the country races to get their
    money out of the stock market
  • Black Tuesday ? October 29, 1929, the day on
    which the Great Crash of the stock market began
  • Great Crash ? the collapse of the American stock
    market in 1929
  • Overall losses totaled 30 billion

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9
Crowd gathering on Wall Street after the 1929
crash
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Economic Crisis
  • Great Depression the most severe economic
    downturn in the nations history, which lasted
    from 1929 to 1941

12
II. Overproduction / Reduction in Purchasing
Farms and factories overproduced beyond the
demand.
Businesses cut production
Demand for goods fell.
Workers suffered from wage cuts and lay offs.

People had little or no money to spend.
13
III . Bank Failures
  • When the stock market crashed, people could not
    repay their loans to the bank.
  • Therefore, banks couldnt give depositors their
    money and banks closed.
  • Many people lost their life savings.

14
Additional Causes Leading to the Crash
  • Uneven prosperity-Wealth was controlled by a
    small percentage of the population.
  • Personal debt- Installment Buying
  • Playing the stock market
  • Speculation
  • Buying on Margin
  • Poor conditions of farmers and workers

15
The Ripple Effect of the Stock Market
  • Initially the effects of the Crash were felt only
    by those who were heavily invested in the market
  • Within a short time, the effects of the Great
    Crash began to ripple through the nations
    economy

16
How the Effects of the Crash Spread to All
Americans
  • Risky Loans Hurt Banks
  • Banks loaned huge sums of money to many high-risk
    businesses
  • Consumer Borrowing
  • When banks called in loans, customers did not
    have cash to pay them

17
  • Bank Runs
  • Fearful that banks would run out of money, people
    rushed to make withdrawals from their accounts
  • To pay back deposits, banks had to call in loans
    from borrowers
  • Many could not repay loans
  • Banks could usually not get money fast enough to
    pay all depositors money they demanded

18
Bank Run
19
  • Bank Failures
  • Combination of unpaid loans and bank runs meant
    that many banks failed
  • Savings Wiped Out
  • Bank failures wiped out what little savings
    people had
  • Cuts in Production
  • Businesses now could not borrow money to use to
    produce more goods
  • Few people had money to buy goods

20
  • Rise in Unemployment
  • As businesses cut back on production, laid off
    workers
  • Unemployment grew
  • Further Cuts in Production
  • As unemployment grew and income shrank, consumers
    spent less and less money
  • Who felt the effects of the Great Crash?

21
Line outside state employment office
22
Great Depression man lying down on pier, NYC
docks, 1935
23
Impact on Workers and Farmers
  • Factories throughout the country began to close
  • Workers lost jobs
  • Pay cuts
  • Restaurants and other small businesses closed
    because customers could no longer afford to go to
    them

24
Impact on the World
  • International banking, manufacturing, and trade
    had made the nations around the world become
    interdependent.
  • When worlds leading economy fell, the global
    economic system began to crumble

25
Great Depression Statistics
  • 12 million people out of work
  • 12,000 people being made unemployed every day
  • 20,000 companies had gone bankrupt
  • 1616 banks had gone bankrupt
  • 1 farmer in 20 evicted
  • 23,000 people committed suicide in one year - the
    highest

26
Hoovers Initial Reaction
  • Capitalism is made up of a series of ups and
    downs.
  • Prosperity is just around the corner
  • People need to pull themselves out of this
    trouble. Rugged Individualism.
  • Government should play only a small role if any
    to help them. (Charities and Individuals
    volunteering help)

27
Hoover Takes Action
  • At first, President Hoover was against offering
    direct government relief.
  • Instead, he asked private charities, such as the
    YMCA, to help.

28
Poverty Spreads
  • People lost savings due to bank closings
  • Lost jobs and cannot pay rents
  • Evicted from homes

New Yorkers queue up in a bread line near the
intersection of Sixth Avenue and 42nd Street in
New York City in 1932 during the depths of the
Great Depression.
29
Dorothea Lange's Migrant Mother depicts destitute
pea pickers in California, centering on Florence
Owens Thompson, age 32, a mother of seven
children, in Nipomo, California, March 1936
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Hoovervilles
  • Hardest hit were those at the bottom of the
    economic ladder
  • Hoovervilles ? term used to describe a makeshift
    homeless shelter during the early years of the
    Great Depression
  • Mocking the president, whom people blamed for not
    resolving the crisis

32
Hooverville
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NYC, Central Park
35
Unemployed workers on Christmas Eve, NYC.
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"Hoover wagons", cars pulled by horses, were used
by farmers too impoverished to purchase gasoline
38
Farm Distress
  • Farm families suffered as low crop prices cut
    their income
  • Lost farms to banks when they could not repay
    debts

39
The Dust Bowl (1931 1939)
  • Dust Bowl ? term used to describe the central and
    southern Great Plains in the 1930s when the
    region sustained a period of drought and dust
    storms
  • Black Blizzards
  • Drought and farming practices contributed to the
    dust bowl
  • Drought and winds persisted for more than seven
    years

40
Causes of the Dust Bowl
  • Overgrazing by cattle and plowing destroyed
    grasses.
  • Drought of the 1930s.
  • High winds

41
Black Blizzards
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Results of the Dust Bowl
  • Migrant workers
  • People who moved from one region to another in
    search of work.
  • Packed belongings in cars and headed West.
  • Locals feared newcomers would take jobs.

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Food Lines in NYC
51
Young boys waiting for soup at a mission
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  • Hoover eventually set up public works programs,
    where the government hired people to construct
    schools, dams and highways. Ex.) Hoover Dam

54
The Hoover Dam
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  • Hoover also approved the Reconstruction Finance
    Corporation (RFC), which loaned money to
    railroads, banks, and insurance companies.

Des Moines Register, April 5, 1930
57
The Bonus Army
  • World War I veterans were due to be paid a bonus
    in 1945.
  • In 1932, over 20,000 jobless veterans protested
    in Washington, D.C. demanding immediate payment.

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Handpainted sign on Bonus Army truck states "We
Done a Good Job in France, Now You Do a Good Job
in America"
61
The United States Army burned this and similar
camps to the ground after routing the many
thousands of protestors that were camped out in
the national capital with tanks, tear gas, and
troops of armed soldiers. (July 28, 1932)
62
  • In clashes with police, four veterans were
    killed.
  • Hoover ordered General Douglas MacArthur to
    clear out the veterans using cavalry, tanks, tear
    gas and machine guns.

The brutal treatment of the Bonus Army
lowered Hoovers popularity even further. The
nation was poised for a new leader to lead them
out of the depression.
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