1. Opening Assignment Would you borrow money to invest in the stock market if it was easily available? What stock would you buy? How might this be very profitable for you? How might this end very poorly for you?

2. Essential Learning Goal and Learning Targets Essential Learning Goal: The student will understand the causes and effects of the Great Depression and the New Deal. Learning Targets: The student will recognize the significance of the Stock Market in the financial/economic collapse of the late 1920’s. The student will identify the causes of the Great Depression.

3. The Stock Market Crash In early September 1929, stock prices peaked and then fell. Confidence in the market began to waver, and some investors quickly sold their stocks and pulled their money out. On October 24, 1929, the market took a plunge. Panicked investors sold their shares, but the worst was yet to come.

4. Stock Market Crash BLACK TUESDAY was the name given to October 29, 1929 the day the stock market collapsed Shareholders frantically tried to sell before prices dropped even lower. A record 16.4 million shares of stock were sold that day. There were millions of additional shares that traders were looking to sell, but they could not find buyers. People who had bought stock on credit were stuck with huge debts as prices plummeted, while others lost most of their savings.

6. Stock Market Problems of the time. By 1929 about 4 million Americans, or only 3% of the population owned stocks. A common practice among investors was to engage in SPECULATION, buying stocks and bonds on the chance of a quick profit, while ignoring the risks. In addition many people began BUYING ON MARGIN, paying a small percentage of a stock’s price as a down payment and borrowing the rest of the money to purchase the stock. These people expected to pay off this debt once they made a profit with their newly purchased stock. Today investors can not use credit to purchase stocks.

7. Financial Collapse The Stock Market Crash of 1929 signaled the beginning of the Great Depression, but was a symptom of the Depression and not an initial cause. The Stock Market Crash did cause a financial collapse. People panicked and withdrew their money from banks, this placed a strain on banks because many had invested the money with which people entrusted them. In 1929 600 banks closed. By 1933, 11,000 of the US’s 25,000 banks had failed. Millions of people lost their savings.

8. A Bank Run in progress.

9. International Trade Halts In 1930, the US Congress passed the HAWLEY-SMOOT TARIFF ACT, which established the highest protective tariff in US history. This law was designed to protect American farmers and manufacturers from foreign competition. The law had the unintended consequence of reducing the flow of goods into the US, the tariff prevented other countries from earning American currency to buy American goods. The Tariff made unemployment worse in industries that could no longer export goods to Europe. Many countries retaliated by raising their own tariffs. Within a few years, world trade had dropped by more than 40%.

10. Financial Collapse Other businesses were hit as well. Between 1929 and 1932 the US Gross National Product was cut nearly in half, from $104 billion to $59 billion. Gross Nation Product is the measure of the nation’s total output of goods and services or the total amount of money changing hands each year. As the economy collapsed millions of workers lost their jobs. Unemployment jumped from 3% in 1929 to 25% in 1933

11. Causes of the Great Depression Tariffs and war debt policies that cut down the foreign market for American goods. A crisis in the farm sector. The availability of easy credit. The unequal distribution of income. These factors led to falling demand for consumer goods, even as newly mechanized factories produced more products. The Federal Government contributed to the crisis by keeping interest rates low, thereby allowing companies and individuals to borrow easily and build up large debts. Financial Collapse of US banks and business failures.

12. HOMEWORK Read Pages 472 – 477 Complete the Worksheet and the writing assignment on the hardship and suffering that many Americans faced during the Great Depression.