The Stock Market and the Great Depression Watching the economy crumble.

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Presentation transcript:

The Stock Market and the Great Depression Watching the economy crumble

Stock Market and Great Depression The 1930s were dominated by the Great Depression which affected every aspect of people’s lives The Great Depression was triggered by the Stock Market Crash of 1929

Stock Market and Great Depression The Setup: People bought stock on the margin. They only owned a small portion of their stocks and took out massive bank loans to buy the rest. Speculation: The belief that the price of your stock would only go up!

Stock Market and Great Depression Example: In 1924, you took out a $12,000 loan to buy stock in Ford Motor Company Total price: 1000 shares at $15 per share = $15,000 You paid $3,000 and bought on the margin for $12,000. You speculate the price will go up to $20,000 a share When the price of the stocks fell, people couldn’t find enough money to cover their loans so everyone sold their stock immediately when they could still get some money for it.

Stock Market and Great Depression October 29 th 1929: Black Tuesday Stocks fell by $16 million dollars as everyone sells their stocks This day started the Great Depression

Stock Market and Great Depression Causes of the Great Depression: 1. Growing unemployment in key industries 2. Overproduction of goods by American businesses 3. Buying stocks on the margin (Speculation) 4. Easy credit and a rise in consumer debt 5. The Stock Market Crash

Stock Market and Great Depression What happened to America? Farm prices dropped because people weren’t buying food Unemployment hit the railroads, construction, and textile factories Automobile sales virtually stopped

Stock Market and Great Depression Some 6,000 banks failed and closed up in the early 1930s There is a “Run on the Banks” as people try to take out all of their money

Stock Market and Great Depression The gov’t and President Hoover did all of the wrong things to try and end the Depression (little gov’t role in economy) Hoover rejected giving gov’t money to the unemployed and instead said volunteers and charities should provide relief. The lowest point of the Depression occurred in 1932 at the end of Hoover’s term

Stock Market and Great Depression