1 / 20

The Stock Market Crash

The Stock Market Crash. Angela Brown Chapter 22 Section 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.

kita
Download Presentation

The Stock Market Crash

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

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

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

  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. 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. http://www.internationalist.org/wallstreet1929.jpg • Americans lost jobs, farms, homes • Ripple effect produced world turmoil for years 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?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_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. http://www.black-thursday.net/img/cover0.png 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.

More Related