The Stock Market Crash Of 1929


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The Stock Market Crash Of 1929

  1. 1. The Stock Market Crash of 1929 Essential Questions: • Why did the Stock Market Crash of 1929 occur?
  2. 2. 1920s: An Era Ends Serious economic  problems began to threaten prosperity Farmers grew more corps  & raised more livestock that they could sell at a profit Consumers and farmers  were going deeper into debt It signaled the end of an era  Basic industries such as  the railroads, textiles, and steel were barely making a profit
  3. 3. Agriculture Agriculture suffered the most  During World War I prices rose  and international demand for crops (such as wheat and corn) soared Farmers had planted more and  taken out loans for land and equipment After the war demand fell and  crop prices declined Many lost their farms when  backs foreclosed and seized the property as payment for the debt
  4. 4. Consumers and Farmers As farmers’ incomes fell they  bought fewer goods and services They were buying less due to:  Rising prices  Stagnant wages  Unbalanced distribution of  income During the 1920s the rich got  richer and the poor got poorer Between 1920 and 1929 the  income of the wealthiest 1% of the population rose by 75% Compared with a 9% increase  for Americans as a whole
  5. 5. Herbert Hoover Hoover won in an  overwhelming victory against Democrat Alfred E. Smith in the election of 1929 Hoover claimed in his  campaign that America was “nearer to the final triumph over poverty than ever before” By 1929 most Americans  still had a huge trust in the nation’s economic health
  6. 6. The Stock Market The Dow Jones Industrial Average was  the barometer of the stock market’s health Measure based on the stock prices of  30 large firms trading on the NYSE Through the 1920s stock prices rose  steadily By 1929 about 4 million Americans, or  3% of the nation’s population, owned stock People began engaging in speculation  They bought stocks and bonds on the  chance of a quick profit, while ignoring the risks Many began buying on a margin  Paying a small percent of a stock’s  price as a down payment and borrowing the rest
  7. 7. The Crash On October 24th, 1929 the market  took a plunge Panicked investors unloaded their  shares of stocks Black Tuesday  October 29th, known as Black  Tuesday Shareholders dumped 16.4 million  shares of stocks People who had bought stocks on  credit were stuck with huge debts Others lost most of their savings  By November investors had lost  about $30 billion dollars The Crash of the stock market  singled the beginning of the Great Depression (1929-194)
  8. 8. Bank and Business Failures After the crash many people  panicked and withdrew their money from banks Some couldn’t get their money  because the banks had invested in the stock market By 1933 11,000 of the nations  25,000 banks had failed Millions lost their savings  Nearly 90,000 businesses went  bankrupt Unemployment skyrocketed 
  9. 9. Causes of the Great Depression There is no one definitive  cause of the Great Depression Most historians and  economists cite: Tariffs and war debt polices  that cut down the foreign market for American goods A crisis in the farm sector  The availability of easy  credit An unequal distribution of  income