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![Causes of The Great Depression [slideshow]](https://cdn.slidesharecdn.com/ss_thumbnails/causesofthegreatdepressionshow-150909215502-lva1-app6891-thumbnail.jpg?width=640&height=640&fit=bounds)
Us ch22 depression_2013
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- 2. 1. She wasthe first to fly solo nonstop across Atlantic 2. Added to the Constitution that legalized alcohol 3. The women of the 20s became known as 4. Term for an illegal bar or underground 5. He was the first to fly solo nonstop across Atlantic 6. The largest bootlegger that created an empire in Chicago by killing his competition 7. List three things that describes the women of the 20s 8. Added to the Constitution that ban the sale and manufacture of alcohol 9. He was a baseball legend who hit 60 homers 10. Term for smuggling alcohol illegally
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- 4. What happens tothe price of items as the demand increases? What happens to the price if the demand decreases? Demand = Price Demand = Price
- 5. The Law ofSupply and Demand Honus Wagner baseball card (1909 ) Demand Only 50 – 60 Honus Wagner baseball cards exist in the world. + + Supply = = Price The card is valuable because of its scarcity. In 2007, a mint copy was sold for $2.35 million.
- 6. The Law ofSupply and Demand Hannah Montana stickers Demand Available almost everywhere. + + Supply = = Price Even though there is a large demand, there is a lack of scarcity. Sells for $1.50.
- 7. The Law ofSupply and Demand A small pile of dirt. Demand Available almost everywhere. + + Supply = = Price No scarcity and no demand. Therefore, this pile of dirt is virtually worthless.
- 8. The Law ofSupply and Demand GI Joe Action Figure (1964 ) Demand In “good” condition. + + Supply = = Price A 1964 GI Joe in good condition is relatively scarce. This one is for sale on Ebay for $350.00
- 9. The Law ofSupply and Demand British poster during WWI asking people to preserve food. Demand U.S. farmers sold farm products to the European powers in large numbers. + + Supply = = Price Due to an increase in scarcity, the price of U.S. farm goods increased.
- 10. How does thestock market work? You buy 100 shares of stock of x $5.00 per shareHow much money have you invested? $500.00 Scenario #1 stock increases to $20 per share 100 shares of stock x $20.00 per share How much are your 100 shares of stock now worth? $2,000.00 How much profit have you made? $2,000.00 stock value - $500.00 initial investment $1,500.00 net profit
- 11. How does thestock market work? You buy 100 shares of stock of x $5.00 per shareHow much money have you invested? $500.00 Scenario #2 stock decreases to $1 per share 100 shares of stock x $1 per share How much are your 100 shares of stock now worth? $100.00 How much money have you lost? $100.00 stock value - $500.00 initial investment $400.00 net loss
- 12. Buying Stocks onMargin: Scenario A investor stock broker Hello, sir. I would like to purchase 100 shares of stock in the Ford Motor Company. How much is it going to cost me?
- 13. Buying Stocks onMargin: Scenario A investor stock broker Well, Ford stock costs $10 per share. You want to buy 100 shares? Figure it out yourself, smartguy!
- 14. Buying Stocks onMargin: Scenario A investor stock broker Ummm… 100 shares x $10 per share = $1,000.00 Oh, well. I only have $100. I can’t afford 100 shares.
- 15. Buying Stocks onMargin: Scenario A investor stock broker No, problem! Just give me $100 and you can owe me the rest!
- 16. Buying Stocks onMargin: Scenario A investor stock broker Like, how much would that be? Let me think… $1,000 worth of stock - $100 paid = $900 owed Alright, it’s a deal!!
- 17. Buying Stocks onMargin: Scenario A investor stock broker Six months later, Ford stock doubles to $20 per share. My 100 shares are now worth... 100 shares x $20 per share $2,000
- 18. Buying Stocks onMargin: Scenario A investor stock broker That’s great! Now pay me the $900 you owe me!
- 19. Buying Stocks onMargin: Scenario A investor stock broker No problemo! It was a pleasure doing business with you!
- 20. Buying Stocks onMargin: Scenario A investor Now let’s figure out how much money I made! $2,000 net worth - $900 owed $1,100 profit - $100 initial investment $1,000 net profit I’ll pay the debtor when I make more…it’s only $900. I already have $2000 anyway..
- 21. Buying Stocks onMargin: Scenario B investor stock broker Six months later, Ford stock decreases to $1 per share. My 100 shares are now worth... 100 shares x $1 per share $100
- 22. Buying Stocks onMargin: Scenario A investor stock broker Too bad, hotshot! You still owe me $900!
- 23. Buying Stocks onMargin: Scenario A investor stock broker But I’m broke! What am I going to do!
- 24. Located in lower Manhattan,New York. It is a street that features many large financial office buildings and companies where stocks are traded, including: NYSE New York Stock Exchange, NASDAQ , AMEX American Exchange, NYMEX New York Mercantile Exchange, NYBOT New York Board of Trade etc.
- 25. Wall Street New YorkStock Exchange. Stocks and shares are bought and sold Located in Wall Street Nation marketplace
- 26. People buy (and “invest”)stocks and shares to earn $MONEY$. They believed money would “multiply”. Buying stocks at LOW, and selling at HIGH. For example, when 1,000 shares of stocks is put into $1.00 worth stocks that rise to $1.50, $500 is earned.
- 27. “If aman saves $15 a week, and invests in good common stocks, and allows the dividends and rights to accumulate, at the end of twenty years he will have at least $80,000 and an income from investments of around $400 a month. He will be rich. And because income can do that, I am firm in my belief that anyone not only can be rich, but ought to be rich.” – John J. Raskob John J. Raskob
- 28. Major investorWill Payne, stated that the Wall Street Stock Exchange had become such an easy way to make money that it ceased to be a gamble, because in a gamble, someone loses – but when invested in stocks and shares, “everybody wins”. People thought the market could sustain the growing high prices, “Stock prices have reached what looks like a permanently high plateau.” – Irving Fisher. Irving Fisher
- 29. People begunto speculate (buying on stock in hope to make quick profit, ignoring risk) people began to buy stocks on margin, (pay on installment).
- 30. Stocks rose by65%. Wages increased by 25%. People began borrowing money to invest. • On Thursday, October 24, 1929, some nervous investors began selling their stocks and others followed, creating a huge sell-off with no buyers • Stock prices plunged, triggering an even greater panic to sell. • Black Tuesday, October 29, 1929 Stock Market Crashes +65% +25% America’s wealth in the 1920’s UH OH! • On October 24th, 12,894,650 shares were sold, setting the record in its time. Then, on October 29th, approximately 16.4 million shares were traded, breaking the record that was set 5 days earlier,
- 31. The GreatThe GreatDepressionDepression
- 32. 1. Unequal distributionof income, too little money in the hands of working people. 2. Availability of easy credit (installment plans) 3. Decrease in demand of durable goods (product that last several years) 4. More competition due to new inventions 5. Crisis in the farm sector– OVERPRODUCTION (produce more than they could sell) Causes of the Great DepressionCauses of the Great Depression • The wealthiest one percent income grew 75 percent, but the average worker saw under a 10 percent gain. • rising prices swallowed up any increase in salary • 70 percent of U.S. families had too low an income for a good standard of living. • Four out of every five families couldn’t save any money during the so- called boom years. Credit allowed Americans to buy expensive goods, but by the end of the decade many people reached their credit limits, and purchases slowed. Warehouses became filled with goods no one could afford to buy.
- 33. brokers demanded investors to pay backloan investors forced to sell their stocks for far less than they had paid, 3rd Sep, 1929 13th Nov, 1929 % loss American Can $1.82 $0.86 53% Anaconda Copper $1.62 $0.70 57% Electric B&S $2.04 $0.50 77% General Electric $3.96 $1.68 58% General Motors $1.82 $0.36 80% New York Central $2.56 $1.60 38% Radio $5.05 $0.28 94% US Steel $2.79 $1.50 46% Westinghous e E&M $3.13 $1.02 67% Woolworth $2.51 $0.52 79%
- 34. Effects on Banks •frightened depositors rushed to withdraw their money, draining the bank of funds. • When investors couldn’t repay margins, banks lost money, too. • 6,000 banks closed. •Many banks themselves had invested directly or indirectly in the stock market by buying companies’ stocks or by lending brokers money to loan to investors on margin. •Bank closures wiped out billions in savings by 1933.
- 35. Impact on Business • Businessescrashed, because banks couldn’t lend money. • Consumers cut back their spending on everything but essentials,
- 36. thousands of farm foreclosure( when an owner cannot pay for their mortgage and the bank repossesses the property to sell it.)
- 37. companies were forced tolay off workers when demand decreased. Unemployed workers had even less money to make purchases nearly 3 million people lost their jobs.
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- 40. 12 millionpeople went out of work, 12,000 people was made unemployed everyday, 20,000 companies and 1616 banks had gone bankrupt, and 23,000 people committed suicide in one year – the highest ever. The total loss by the end of the next week amounted to $30 million dollars, ten times more than the annual budget of the federal government, far more than the U.S. had spent in all of World War 1. Contributing to The Great Depression.
- 41. • Exhausted soil •Drought enter 1930s,
- 42. Migrants • By theend of the 1930s, 2.5 million people had left the Great Plains states. • Many headed along Route 66 to California, then settled in camps and sought work on farms. • The migrants were called Okies, after the state of Oklahoma, but migrants came from many states.
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- 45. Questions of Credibility Hoover eventually saw the limitations of his ideals and pushed for some direct relief, but his optimistic claims about the economy undermined his credibility with voters. Early on, when millions lost their jobs, he said the nation’s basic economic foundation was sound. Just a few months after the crash he announced “I am convinced we have passed the worst,” and he spoke glowingly about the relief efforts. Millions of Americans did not share Hoover’s viewpoint. Questions of Compassion Many Americans came to question Hoover’s compassion. As economic conditions grew worse, his unwillingness to consider giving direct relief to the people became hard for most Americans to understand. When Hoover finally broke his stated beliefs and pushed for programs like the Reconstruction Finance Corporation, people wondered why he was willing to give billions of dollars to banks and businesses but not to individuals.
- 46. •Some who losttheir homes lived in shantytowns, or Hoovervilles,
- 47. The Hoover Dam. •Thedam harnessed the Colorado River to provide electricity and a safe, reliable water supply to parts of seven states. •The federal government provided the funding for the project ($800m)
- 49. Edlyn 2000-2005 Mary lynn1931-1934 Glenn 1976-1980 Matthew 2006-2010 Kristine 1961-1965 Edward 1986-1990 Andrew 1920-1925 Tracy 2001-2005 Alexandra 1946-1950 Thove 1936-1940 Sirena 1996-2000
Editor's Notes
- #25 Wall Street Wall Street is located in lower Manhattan, New York. It is literally a name for a street that features many large financial office buildings and companies where stocks and shares can be traded to make profit. Some major stock exchanges in Wall Street are: - The New York Stock Exchange, - The National Association of Securities Dealers Automated Quotations - The American Exchange - The New York Mercantile Exchange - And The New York Board of Trade
- #27 Why buy stocks and shares? The answer is, people buy stocks and shares for money, they invest money in their stocks and shares to earn lots of money, back then they thought money would multiply, even now people put their entire savings onto stocks and shares and live off it. People buy stocks when their prices are sold at low and sell them at high, this is how they make money. People who are good at stocks and shares can turn 1 thousand dollars into 1 thousand five hundred in no time, but others who are inexperienced could well loose their entire savings just by doing stocks and shares.
- #28 Quotes “ If a man saves $15 a week, and invests in good common stocks, and allows the dividends and rights to accumulate, at the end of twenty years he will have at least $80,000 and an income from investments of around $400 a month. He will be rich. And because income can do that, I am firm in my belief that anyone not only can be rich, but ought to be rich.” From John J. Raskob, Everybody Ought to be Rich (June 1929) in the days before the crash.
- #29 Quotes (continued) Another major investor, Will Payne, stated that the Wall Street Stock Exchange had becomes such an easy way to make money that it ceased to be a gamble, because in a gamble, someone loses – but when invested in stocks and shares, “everybody wins”. Many people thought that the market could sustain the growing high prices. Irving Fisher, a highly-regarded American economist, said before the crash, “Stock prices have reached what looks like a permanently high plateau.”
- #31 The Stocks and Shares in the 1920’s During a period of time, stocks and shares rose at the phenomenal rate. Wages were increased, stocks were expensive and people went and invested most of their money and started borrowing off each other to make a fortune. Unfortunately in 1929, The Great Wall Street Crashed, a bomb was released in America’s largest bank and money was lost. People went bankrupt and America fell into debt. Not only America, but many countries, such as Weimar in Germany, were affected by this crash because they had built her economy on America’s loans.
- #41 Losses The loss from the crash was unbelievable: 12 million people went out of work, 12,000 people was made unemployed everyday, 20,000 companies and 1616 banks had gone bankrupt, and 23,000 people committed suicide in one year – the highest ever. The total loss by the end of the next week amounted to $30 million dollars, ten times more than the annual budget of the federal government, far more than the U.S. had spent in all of World War 1. The Great Wall Street Crash was probably also one of the major contributing factors to the event that followed – The Great Depression.