1. Wednesday, April 8 Welcome back! Please submit your Harlem Renaissance artist poster on the front table. Thank you! Bellringer: – Using a Venn diagram, compare and contrast buying on credit with buying on margin.

2. Buying on credit Buying on margin

3. Buying on credit Buying on margin Used by consumers Used for commercial products like refrigerators, etc. Used by investors Used for buying stocks Used to engage in speculation Used for big purchases Include interest Create debt Allow the buyer to GET IT NOW!!

4. Causes of the Great Depression Unequal distribution of wealth High tariffs and war debts Monetary policy Agricultural overproduction Industrial overproduction Consumer behavior Stock market crash; financial panic

5. "I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering.... The lesson should be constantly enforced that though the people support the Government the Government should not support the people." (1930) President Hoover’s belief in self-reliance would later affect his ideas about how to best solve the upcoming depression President and Mrs. Hoover

6. ‘The party is over’ The stock market crash – Stocks soared 300 points in five years – DJIA peak: Sept. 3, 1929 at 381.17 This is known as a “bull market” – There were warnings … “Stock prices have reached a permanent high plateau.” “A crash coming, and it may be a terrific one.” – But few people heeded them

7. Stocks were overpriced due to speculation, meaning they were not worth their sale price Massive fraud and illegal activity occurred due to a lack of regulation and rules Margin buying, or buying using credit Federal reserve policy Reasons for the stock market crash, October 1929

8. ‘The party is over’ The stock market crash – Stock prices began to decline in September 1929 – Nervous investors begin to sell … and sell … and sell … until … – Oct. 29, 1929, known as “Black Tuesday” Margin calls Calling in money that people didn’t have Those who bought on margin lost everything

9. ‘The party is over’ The market lost: – $14 billion on Oct. 29 – More than $30 billion in two days Dow Jones Industrial Average, Black Monday and Black Tuesday Oct. 28, 1929−38.33−12.82260.64 Oct. 29, 1929−30.57−11.73230.07

10. WALL STREET ON THE DAY OF THE CRASH, OCTOBER 1929 STOCK MARKET CRASH AND FINANCIAL PANIC

11. The Depression begins After crash, people panic, and the run on banks begins Go to banks to withdraw money Banks run out of money to give Banks close 9 million people lost their savings 85,000 businesses went bankrupt Unemployment rose from 3 percent in 1929 to 25 percent in 1933

12. “The Party is Over”

13. Depression begins Businesses close, people lose jobs. Hawley Smoot Tariff – Meant to protect American business from foreign competition, but … – Prevents foreign countries from making and spending American money, and … – Foreign countries raise tariffs, so American goods didn’t sell as well overseas – Loss of jobs

15. ‘The party is over’ The Dow had peaked at 381.17 on Sept. 3, 1929 Selling continued until the Dow reached a low of 41.22 on July 8, 1932

16. 25-year recovery …

17. … or not?or not – Deflation: The value of money was changing – Dividends: Yield was 14 percent on the Dow’s lowest day, but that value isn’t represented in the DJIA – The Dow Jones Industrial Average and the overall market aren’t the same thing

18. ‘Black Tuesday’ in perspective …