Presentation on theme: "The Great Depression Social Studies 9. The Stock Market A stock is a part of the ownership of a company Companies sell stocks to earn money in order."— Presentation transcript:
The Stock Market A stock is a part of the ownership of a company Companies sell stocks to earn money in order to develop new products or to expand their company In return, companies promise the stockholders a part of the earned profits
The Stock Market Le price a stockholder buys or sells its stocks depends on the speculated (estimated) value of the company. The price of stocks is never stable or guarenteedi Buying stocks always involves a certain level of risk Some people borrow money to invest in the stock market – this is called leveraging
The Stock Market Crash of 1929 Thursday, October 24, stock prices begin to fall because of wrong speculation and rumours. Mass panic follows and stockholders sell 13 million shares in one day. The fall in share prices and the ensuing panic continue. Shareholders try to sell their stocks as fast as possible to reduce their losses, which creates a further drop in prices.
The Stock Market Crash of 1929 This cycle continues until the entire stock market crashes. October 29, 1929, known as “Black Tuesday”, the New York Stock Exchange crashes. This crash creates a wide-spread economic depression
The Great Depression 1. Millions of people fall into poverty 2. Unemployment increases from 5% to 24% (15 million people are unemployed) 3. Thousands of banks close and all deposits are lost 4. Unemployed men wander the country in search of jobs (les hobos) les hobos 5. Banks foreclose on houses and families are evicted 6. The number of suicides increases
1. Uneven distribution of wealth 5% of Americans own 30% of the country’s wealth Only 70% of the population earns enough money to live comfortably
2. Overproduction of goods and services Factories expanded rapidly and without limits They are producing more goods than can reasonably be sold or consumed, even after demand for these begins to fall Companies are over-hiring, which causes high unemployment rates after the Crash.
3. Increase in personal debt People have been borrowing too much money in order to buy new consumer goods and luxury items Buy now, pay later! When the economy starts to slow down, families cannot repay the high amount of personal debt they have accumulated and most is lost
4. The Stock Market Crash Investing in the stock market becomes like a game (gambling) It is seen as an easy, fast way to make a lot of money Confidence in the market is high People are borrowing money to invest (leveraging) with only a 10% down payment When the stock market crashed, investors loose not only the principle, but also accumulate more debt.
5. Natural Disasters In western North America, a severe drought and a locust infestation ravages the agricultural farms Dust Bowl
Natural Disasters Farmers cannot grow their crops and harvests fail Farmers go bankrupt and are forced to seek employment in the city A global food shortage begins Impacts on other industries as well (ie, transportation)
6. High import duties After WWI, most countries wanted to protect their industries and workers Therefore, gov’ts put into place high import duties on other country’s goods. In reality, these high tarifs have a negative impact on the economy Countries that need certain products cannot buy them, and the industries that were producing a surplus of products cannot sell them.
7. Government inaction Most gov’ts did not want to interfere in the economic affairs of the stock market This lack of economic and social assistance prolonged the Depression PM Mackenzie King, for example, believed that the Depression was a temporary situation and that it could resolve itself quickly.