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Unit #8 The Great Depression of 1930s. LESSON #8:1 The Crash of the Economy. p. 232-236. LESSON #1 – The Crash of the Economy (2/23). VOCABULARY Herbert Hoover (232) Stock Market Bull Market (233) Speculation Buying on margin Margin call The Great Crash Black Tuesday (234)
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Unit #8The Great Depression of 1930s LESSON #8:1 The Crash of the Economy p. 232-236
LESSON #1 – The Crash of the Economy(2/23) VOCABULARY Herbert Hoover (232) Stock Market Bull Market (233) Speculation Buying on margin Margin call The Great Crash Black Tuesday (234) A bank run • ESSENTIAL QUESTIONS • Why were so many people freely irresponsible with Stock Market investments? • Why did Stock Market prices keep rising, then drop sharply?
LESSON #1 – The Crash of the Economy(2/24) ESSENTIAL QUESTIONS • Why is a Bull Market good for investors? • Why can a long Bull Market become a problem? VOCABULARY Herbert Hoover (232) Stock Market Bull Market (233) Speculation Buying on margin Margin call The Great Crash Black Tuesday (234) A bank run
Wednesday, 2/3/16 American History – subject for today Lesson #1 – Economy crashes (continued) Essential Questions: • Why is a Bull Market good for investors? • Why can a long Bull Market become a problem? Homework No quiz this week
The Crash of the Economy Intro thoughts Mr. Jacoby will read six statements. On a scale of 1-10, give each a score.
Ponder questions • People should be free to invest their money however they want. • The government should force banks to guarantee much of the money the say they have. In other words, if you deposit $1,000 in a bank, they should guarantee that the $1,000 will be there when you want it. • The government should not regulate the investment industry. It should be free to lend freely, and invest freely. • Banks should hold most of their money in reserve. In other words, they should not be allowed to lend out money they don’t have. • Banks are smart if they take the money that is owed to them, and invest it in other markets to make a profit. Everybody gets richer that way. • When the stock market, real estate market, or any investment market starts gaining value too fast, the government should intervene to slow that growth down
Ponder questions response • For your #2, 4, and 6, reverse your numbers. If you had a 7, now subtract that from 10, to get a 3. • The higher your number is, the more risk you think Americans should be allowed • It was this risk that led to the stock market crash, as well as the more recent .com crash and real estate crash • Why would Americans like the ability to take risk?
Then watch this… And answer questions again… Intro thoughts http://americanhistory.about.com/video/5-Causes-of-Great-Depression.htm
THE CRASH OF THE ECONOMY https://www.youtube.com/watch?v=bgY48AHdVJ0 Watch this 10m intro vid.
The long “Bull Market” (reference p. 232-233) • What was the 1920s like, that kept people gambling their money in the stock exchange? • What is a Bull Market? • What was buying on margin? • Why did people just start selling their stocks in 1929? • What happens at the “margin call? https://www.youtube.com/watch?v=fV4l5w0ZpcY
The Crash of the Market Reference p. 233 • What does it mean that prices “peaked”? • On Monday, Oct. 21, 1921 prices started falling • Once prices started falling, speculators knew they earned as much as they could on “inflated” stocks • What does “inflated” value mean? • What happened on “Black Tuesday”? • How much was lost? https://www.youtube.com/watch?v=FXNziew6C9A
The Collapse of the Economy • The stock market crash only effected investors, not most Americans • The way the banks were effected THEN hurt the average American • What had banks done during the “long bull market” of the 1920s? • When the banks were unable to collect on some of their investors, they stopped lending $$ to businesses. • What were businesses then unable to do? • If a bank could not survive the losses and had to close, what happened to your savings in that bank? • What is a “bank run”? • When depositors run to the bank to pull out their money before it collapses, often causing the bank collapse • This started the collapse of the whole economy https://www.youtube.com/watch?v=bgY48AHdVJ0
Your analysis: • Could anything have been done to prevent the crash of the stock market in October 1929? • Could the depression have been prevented if the stock market never crashed?