Presentation on theme: "The Stock Market Crash of 1929 Mr. Wilson’s English Class."— Presentation transcript:
The Stock Market Crash of 1929 Mr. Wilson’s English Class
How it Began In the 1920’s, U.S. corporations, banks and individuals recklessly invested their money, even borrowed money so that they could invest on the stock market. Why? Because certain economists from well known Universities (Yale, Harvard) theorized that the stock market was on a “permanently high plateau.” And for a short while, there was nothing but profit… September 3rd, 1929: The U.S. Stock market had reached an all-time high.
Black Thursday The Federal Reserve Bank – which controls the U.S.’s financial policy (in Canada it is called “The Bank of Canada” – tightened the availability of credit (i.e. it increased interest rates). This is a standard measure to control inflation. In response, most banks and brokers immediately demanded payment for their loans, and people started cashing in their stocks in order to cover their butts. By 1pm on Thursday, October 24th 1929, over 12.9 million shares had been traded, a record loss for the U.S. stock exchange.
Black Thursday Many banks suddenly began investing heavily in “blue chip” stocks (such as U.S. Steel or phone companies) in an attempt to stabilize the market, this approach had worked in the past. Thanks to the media, the U.S. population panicked over the weekend, and the haemorrhage continued.
Monday, October 28th, 1929 The market crashed even further, another record 13% was lost by the end of Monday. Furthermore, there was a rumour floating around that President Herbert Hoover would not veto the imminent Tariff Bill, which would tighten taxes paid on imports and exports. This was also supposed to help the situation. But amidst the panic and rumours, the market continued to plummet.
Tuesday, October 29th, 1929 Black Thursday was eclipsed as the record was broken, and 16.4 million shares were sold. The U.S. stock market would continue its decline for another two years, until July, 1932 it would reach a low not seen since the 1800’s
Implications? At the time, the United States was he leading industrial power, producing 45% of the world’s manufactured goods, which compounded the collapse. International consumer buying suddenly declined, leading to overproduction (especially in Europe, who was trying to keep up with the States and the newly industrialized Japan), which further eroded the already damaged European economy.
Implications? One of the biggest problems? Working class wages (the central component of a healthy economy) had not risen in conjunction to the prosperity of the 1920’s, and suddenly worker wages were drastically cut and unemployment skyrocketed. By 1933, it was estimated that 14 million U.S. workers were unemployed (that’s about half of Canada’s present population), and more than 5000 banks had closed.
What happened in Canada? Because the U.S. is our greatest trading partner, Canada was very hard hit during the Great Depression. The main problem was Canada’s economic dependence on the export of wheat, where prices fell to almost 50% of what it was pre-crash. Mackenzie King, the Prime Minister of Canada, believed it was not a big deal and refused to help the provinces with financial aid.
The Dirty Thirties The 1920’s were known as the “Roaring Twenties,” but the previous decade’s decadence would only be replaced by hard times. Furthermore, the U.S. enacted a policy of prohibiting legal drinking. This led to some major issues, like organized crime!
The Dust Bowl From 1930 to 1936, the prairies of central North America experienced a severe drought. This, coupled with bad agricultural practices (like ignoring crop-rotation or cover-crops!) led to massive dust storms. Known as “Black Blizzards” or “Black Rollers,” the worst hit States were Texas, Oklahoma, New Mexico, Colorado and Kansas.
The Dust Bowl As a result, many “Okies” were forced to abandon their homes, mostly heading West to California. There they found more work, usually picking fruit crops, but not with enough pay to really settle down. This is the main setting for John Steinbeck’s classics: “The Grapes of Wrath” and “Of Mice and Men.”