The 1929 Stock Market Crash, Bank Failures and the Great Depression.

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Presentation transcript:

The 1929 Stock Market Crash, Bank Failures and the Great Depression

Causes of Black Tuesday Buying stocks on margin Overexpansion of credit Speculation

Buying Stocks on Margin Buying on margin means to pay a small percentage of a stock’s price as a down payment and borrowing the rest. Some purchasers were lent up to 75% of the stocks value. This worked as long as stock prices continued to rise.

Overexpansion of Credit When people are approved for credit that they should not qualify for.

Speculation Speculation – The engagement of risky business transactions, on the chance of a quick or considerable profit. In this case, risky stock transactions artificially increased the value of the market.

The Stock Market Crash of 1929 October 29 th, 1929 also known as Black Tuesday was the day the market hit rock bottom. A record 16 million shares were sold that day. This crash signaled the beginning of the Great Depression.

Bank Failures After the crash, Americans panicked and withdrew their money from banks. Many banks lent out more than they had in reserves so they could not cover their customers withdrawals. By 1933, 6,000 banks had failed.

The Great Depression The period of severe economic decline between 1929 and 1941.

Main Causes of the Great Depression An old and decaying industrial base A crisis in the farm sector – greater supply than demand The availability of easy credit And unequal distribution of wealth

The Effect of the Depression on People’s Lives People lived in Shantytowns called Hoovervilles. atch?v=GTnVMulDTYA atch?v=GTnVMulDTYA People ate at soup kitchens and waited in bread lines. Many men abandoned their families and became hobos. A hobo was a person who rode trains from town to town. atch?v=NN_xvE79iXE atch?v=NN_xvE79iXE

Relief during the Great Depression In the beginning of the Depression under President Hoover, only indirect relief was available Assistance from private citizens or religious organizations. Under President Franklin Delano Roosevelt (FDR), the government started providing direct relief Cash payments or food provided by the government to the poor.