1. The Stock Market Crash Angela Brown Chapter 22 Section 2

2. Stock Market  1928 Dow Jones Industrial Average - average of stock prices of major industries  March 1929 risen another 122 points  September 3 all- time high of 381 http://www.dowjonesstockmarket.info/dow_jones_stock_market_results.jpg

3. http://leduc998.files.wordpress.com/2008/05/graph1920-1929.gif

4. The Market Crashes  Prices for many stocks soared far above their real value in terms of the company’s earnings and assets. http://www.stockbreakthroughs.com/ images/adcopy/1929%20Stock%20 Crash.gif

5. Black Thursday  Stocks fell slowly.  Some stockbrokers called in loans – others continued to lend  Dropped 21 points in an hour Oct. 23  Oct 24 investors began to sell – stock prices fell http://blacktuesday.info/images/Black%20Tuesday/Black_Tuesday_2.jpg

6. BBBBusiness, political leaders told country not to worry. $$$$3 billion paper loss on the stock exchange in a single day. http://lphs.k12.ca.us/rm1/online/hotpotatoestav/TAV10-1/_Stock_ market_crash_1929.jpg

7. Black Tuesday  To stop panic, a group of bankers pooled money to buy stock.  Stabilized prices for a few days  Investors raced to get their money out of the stock market. http://static.howstuffworks.com/gif/ government-control-stock-market-crash-1.jpg

8.  Black Tuesday, Oct. 29, 16.4 million shares were sold, compared with average 4 million to 8 million shares per day = GREAT CRASH  Continued to fall November 13 198.7 from 381 - $30 billion total losses  Business Cycle – periods of economic growth, then contraction

9. From Riches to Ruin  Took time for people to recognize the extent of the disaster caused by the crash.  People whose entire wealth did not depend on the stock market, life went on much as before.  Brokers and banks called in loans – people did not have cash to pay them www.britannica.com

10. The Crash Affects Millions  1929 4 million of 120 million U.S. population had invested in the stock market  soon affected millions had never owned stock  Great Depression – a severe economic decline that lasted from 1929 until the U.S. entered WWII in 1941 (12 years)

11.  Americans lost jobs, farms, homes  Ripple effect produced world turmoil for years http://www.internationalist.org/wallstreet1929.jpg http://www.picturehistory.com/images/products/1/6/1/prod_16139.jpg

12. Impact on Workers and Farmers  1931 Ford shut down Detroit automobile Factories – 75,000 out of work  European workers had government unemployment insurance  1932 ¼ labor force out of work (12 million)

13.  The Gross National Product (GNP) – total value of goods and services a country produces annually ($103 billion in 1929)  1933 GNP 56 billion http://www.downtownexpress.com/de_76/wall.gif

14. Banks Close  Banks exist on interest earned from lending out deposits.  People rushed to withdraw money.  5500 banks failed.  1933 money from 9 million savings accounts vanished. http://cache.eb.com/eb/image?idhttp://cache.eb.com/eb/image?id= 1017&rendTypeId=4

15. Impact on the World  International banking manufacturing, trade made nations interdependent.  Global economic system crumbled.  U.S. had insisted France, Britain repay war debt.  Import taxes high = hard for European nations to sell goods in U.S.

16. http://www.j-bradford-delong.net/Graphics/gif_files/PageMill_ Resources/image11.gif

17.  Allies relied on Germany’s reparations for payments.  Depression – investments fell off – Germany suspended reparations – Allies stopped payments  Europeans couldn’t afford to buy U.S. goods = downward cycle in global economy

18. Causes of Depression  Overspeculation  Speculators bought stocks with borrowed money, pledged those stocks as collateral to buy more stocks.  Collateral is an item of value that a borrower agrees to forfeit to the lender if the borrower cannot repay a loan.  Stock market boom was based on borrowed money and optimism instead of real value.

19. Government Policies  Federal Reserve System, which regulates the amount of money in circulation, cut interest rates to spur economic growth.  1929 limited money supply to discourage lending.  Too little money in circulation to help the economy recover.

20. An Unstable Economy  National wealth was unevenly distributed (saved or invested rather than buy goods).  Industry produced more goods than could sale.  Farmers and workers not part of boom.  Unevenness made rapid recovery impossible. http://www.black-thursday.net/img/cover0.png