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The Great Depression: Prosperity is Shattered

The Great Depression: Prosperity is Shattered. 1929-1939. Economic Troubles on the Horizon. 1920s= economically limitless Some warned= farm crisis & “ sick” industries Few worried, most= keep growing. Economic Troubles on the Horizon.

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The Great Depression: Prosperity is Shattered

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  1. The Great Depression: Prosperity is Shattered 1929-1939

  2. Economic Troubles on the Horizon • 1920s= economically limitless • Some warned= farm crisis & “sick” industries • Few worried, most= keep growing

  3. Economic Troubles on the Horizon • “Ours is a land rich in resources; stimulating in its glorious beauty; filled with millions of happy homes; blessed with comfort and opportunity. In no nation are the institutions of progress more advanced. In no nation are the fruits of accomplishment more secure. In no nation is the government more worthy of respect. No country is more loved by its people. I have an abiding faith in their capacity, integrity and high purpose. I have no fears for the future of our country. It is bright with hope.”– President Herbert Hoover, Inaugural Address, March 4, 1929

  4. Credit • Faith in the economy= purchased products on credit • Gov’t encouraged it= interest rates low • Reliance worried some= downturn, debt would be crippling • Warnings were ignored

  5. Playing the Market • Confidence = investment • Demand = stock prices = Bull Market= upward trend • No danger of a bear market= downward trend

  6. Playing the Market • Stock speculation- buying & selling for a quick profit= widespread • Fueled growth, but created problems= inflated prices • Stocks sell for more than their worth, if confidence would weaken, prices would fall

  7. Playing the Market • Margin buying- purchasing stock w/ borrowed $ • Worked w/ a bull market • Prices , investors= debt • Warnings ignored

  8. Stock Market Crashes • Bubble burst on Black Thurs.– Oct. 24, 1929 • Investors= nervous rising interest rates • Confidence & prices

  9. Stock Market Crashes • Black Tues. Oct. 29=16 million shares of stocks dumped • Brokers asked customers for $ that was owed • Unable to pay= forced to sell w/ losses • Stocks cut in ½, holders lost $30 billion

  10. Quick Review • What business practices concerned economic experts during the 1920s? • How did the federal government encourage credit purchases? • What does the practice of stock speculation create? • Why are October 24 & 29 referred to as black days?

  11. Activity: Crash of 1929 Commentary • Individually read short newspaper excerpts that span shortly before the crash to after the crash • Answer the questions about the excerpts

  12. Activity • Identify the warnings financial experts issued during the 1920s • Then answer: Why did the public largely ignored these warnings?

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