Presentation is loading. Please wait.

Presentation is loading. Please wait.

The Stock Market Crash. Stock Market Down Jones Industrial Average  1928- 191  March 1929- 313  Sept 1929- 381  Keeping track of points was very popular.

Similar presentations


Presentation on theme: "The Stock Market Crash. Stock Market Down Jones Industrial Average  1928- 191  March 1929- 313  Sept 1929- 381  Keeping track of points was very popular."— Presentation transcript:

1 The Stock Market Crash

2 Stock Market Down Jones Industrial Average  1928- 191  March 1929- 313  Sept 1929- 381  Keeping track of points was very popular Stock prices began to fall slowly Stock market closed on Wed 10/23/1929  Dropped 21 pts in an hour Thursday 10/24/1929 (Black Thursday) worried investors began to sell  Prices fell GE stock at $400/share sold at $283/share

3 Business and political leaders told the country not to worry Bankers got together to buy stock to try and help stabilize prices  Only worked a few days by Monday 10/28/1929 prices fell again Black Tuesday- 16.4 million shares were sold  Great Crash- Collapse of the stock market Overall losses were $30 billion Part of the business cycle

4 Effects of the Great Crash Beginning only felt by the people invested in the stock market Began to ripple through the economy

5 Effects of the Crash Risky loans hurt banks  Earn money on interest of money lent businesses for high risk investments  When prices fell they could not business could not pay loans Consumer borrowing  Made money on loans to consumers  Consumers did not have money to pay loans

6 Effects of the Crash Bank runs  People were fearful that banks would run out of money  Made withdraw from banks  Banks had to recall loans Bank failures  Combinations of unpaid loans and bank runs  Closed when they could return money to the depositor  More than 5,500 banks closed Savings wiped out

7 Effects of the Crash Cuts in production  Business could not borrow money to produce goods  Lacked incentive to produce because people didn’t have money to buy goods Rise in unemployment  As production decrease jobs were cut Further cuts in production  Unemployment grew, incomes shrank, consumers spend less and less, production decreases

8 Impact on workers and farmers No money and little incentive to produce led to factories closing  Thousands of people lost their jobs 1931 Henry Ford shut down factory in Detroit- 75,000 people out of work  Factories closing led to small business closing Farm prices fell  Wheat 1929-$1.18/bushel, 1932 $ 0.49  Cotton 1929- $0.19/lb, 1932 0.065/lb 1932- 12million were unemployed, 25% of labor force GNP went from $103 billion to $56billion

9 Impact on the world Other nations depended on the US for markets, investments and loans After WWI- US insisted that allied countries pay their war debts  Import taxes were high  Were unable to sell goods in the US  Had to rely on Germany’s reparations

10 Impact on the World If US invested in Germany reparations continued  But investments failed  German banks failed, suspended reparations  Allies stopped paying debts Industrial production fell in Europe  40% in Germany  14% in Great Britain  29% in France

11 Causes of the depression Stock market crash did not cause the depression  Result of underlying problems with US economy Wealth was unevenly distributed  Most of wealth in hands of a few families Industry produced more goods then needed Farmers and workers did not share in the economic boom

12 Causes of the Depression Overspeculation  People bought stocks on collateral- item of value that a borrower agrees to forfeit to the lender if the borrower cannot repay the loan Stock market boom was on borrowed money Federal Reserve System (regulates amount of money in circulation)  Cut interest rates to bring growth  Then limited money to discourage lending  Too little money in circulation to help recover from crash


Download ppt "The Stock Market Crash. Stock Market Down Jones Industrial Average  1928- 191  March 1929- 313  Sept 1929- 381  Keeping track of points was very popular."

Similar presentations


Ads by Google