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“Boom” to “Bust”

“Boom” to “Bust”. 1929-1941. The Stock Market. As more people had extra money in the 1920’s, many started to invest in the Stock Market. Question: What is a stock and what is the Stock Market?

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“Boom” to “Bust”

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  1. “Boom” to “Bust” 1929-1941

  2. The Stock Market • As more people had extra money in the 1920’s, many started to invest in the Stock Market. • Question: What is a stock and what is the Stock Market? • Answer: Stocks are small pieces of a company. When you own a stock or “share” you own a part of that company. If the company does well, you make money, when it does poorly….. • The Stock Market is literally the buying and selling of shares in many different companies in an effort to make money. • Question: Why would a company sell stock or shares in that company?

  3. “Bull Market”- When the stock market is doing well and prices are going up. “Bear Market”-When the stock market is doing poorly and prices are going down. “Margin buying”- The practice where people could buy a stock while only putting down 10%and borrowing the rest. Many would sell the stock at a higher price and pay off the money they borrowed. This worked ok until a “margin call”. (Click on “crash” on the wiki) “Speculation”- The practice of buying and selling shares to make a quick profit. This works during a “bull” market but not during a “bear”.

  4. October 1929 • A large number of investors nervous about the economy, started selling off their stocks all at once leading to a panic as others started to sell theirs as well. Stock brokers made margin calls to people who owed money. To cover what they owed, people sold more stocks…

  5. “Black Thursday” and “Black Tuesday” October 29, 1929(The Stock Market Crash) • Causes: • Stock speculation • Margin buying (margin calls) • Installment buying(buying on credit) • Debt • Results: • “Run” on the banks • Loss of trust in banks • People defaulting on loans taken from the banks and bank collapses

  6. President Hoover and the Crash “Pull yourself up by your bootstraps”- No whining just work harder! “Volunteerism” instead of government aid (The Salvation Army, Red Cross, soup kitchens, churches, neighbors) Publics works programs like the building of the “Hoover Dam” The Reconstruction Finance Corporation or “R.F.C” (loans from the government to keep businesses and banks afloat)

  7. The “Bonus Army” in 1932 (or the nail in Hoover’s coffin)

  8. President Franklin Delano Roosevelt and the Great Depression • What was the “New Deal”? It was one of FDR’s campaign slogans… Americans would get a “new deal”. He was vague as to what that was but promised to help the needy, jobless and elderly. • What was the first thing FDR did to try and stem the momentum of the Depression? He encouraged people to go back to their banks and pulled together a team of experts to come up with ideas to make banks more stable. • What did FDR ask from Congress? He asked them to back the “Alphabet Soup Programs” (CCC, WPA, NRA, TVA, etc.) which were programs to put people back to work as well as programs designed to stabilize and regulate industry. • Did the New Deal programs help? The New Deal started to bring confidence back into the economy but ultimately didn’t solve the Depression.

  9. Reaction to the New Deal • Some thought the New Deal should do more for Americans while others thought it was giving our government too much control and taking away our freedoms. • FDR argued that the Depression was a national emergency and therefore the government had a right to take over (think 9/11 or the recent bailouts/regulations) • The Supreme Court ultimately ruled parts of the New Deal as being unconstitutional. • What was FDR’s reaction to this that upset people in both parties? Hint: It has to do with the Supreme Court

  10. The cartoon is called The Illegal Act- “I’m sorry but the Supreme Court says I must chuck you back again”. (See the wiki for more cartoons related to this controversial incident)

  11. A Great Depression “hodgepodge” • Hoboes and Okies • The “Dust Bowl” and “Black blizzards” • Some famous people during the 1930’s

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