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Understanding the Causes and Impact of the 1929 Stock Market Crash

This review explores the factors that contributed to the confidence in the economy during the 1920s, the dangers of late 1920s investment practices, and the dire conditions for farmers leading up to the Black Tuesday crash on October 29, 1929. It highlights the drastic drop in stock prices, the initial response of bankers, and the subsequent economic depression lasting from 1929 to 1941. The review examines the widespread impact on millions, including unemployment and business closures, and addresses the broader implications for international economies.

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Understanding the Causes and Impact of the 1929 Stock Market Crash

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Presentation Transcript

  1. The Downward Spiral The Stock Market Crash Chapter 22 Section 1

  2. Quick Review: • Why did American’s have such confidence in the economy in the 1920s? • What potential investment dangers were seen in the late 1920s? • What were conditions like for farmers?

  3. Black ________ —October 29, 1929 • 16.4 million shares sold—compared to 4- 8 million normally • Race to get _________ out of the stock market • Prices continued to fall in the “_____ ______” • By Nov. 13, overall losses totaled $30 billion • Many went from ______ to _____ • For some, life savings as well as borrowed money had “melted” away.

  4. The Market Crashes • Stock prices as popular as Homeruns • Prices soar above the company’s _____ ______ • ______ Thursday—Oct. 24, 1929 • ____ _______ falls 21 points in an hour • Bankers pooled together to stop the _____ • They were able to hold the market . . .for a few days

  5. The Business Cycle

  6. Millions Affected • The First to Suffer • 4 million US _________ (pop. 120 million) • The Crash triggered the “_______ _________” • Severe Economic ______ from 1929 until 1941 If only just over 3% were invested in the market, how could it affect so many?

  7. Impact _________ Lost Money Could not pay back _______ Called in _____ of non-investors “____” on the Bank _____ were forced to close Left with nothing 9 million ________ _______ vanished

  8. Impact _________ Lost Money GNP fell from $103 billion in 1929, to $56 billion by 1933 Had no _______ to buy goods Factories had to cut back _________ By 1932, 12 million were unemployed • Small businesses closed • House servants dismissed • Farm prices plummeted Millions left ________ or ____________

  9. Impact Investors Lost Money Could not support _______ markets Allies had to rely on German reparations for income Could not invest in Germany, so German reparation payments ceased America called in ____ ______ and raised tariffs Sparked European Depressions Europeans could not afford to buy ________ _______

  10. Why did this happen? • ______________ • Too much stock was bought on _______ with unstable collateral • Limited Money in ___________ • The Gov’t wanted to stop overspeculation so they cut back on the amount of _______ ________ • After Crash, not enough money in _________ to bring America back up • ________ Economy • National wealth was unevenly __________ • Industry produced more than __________ could afford • ________ and ________ had not shared in the boom

  11. In Review: • What events led to the stock market’s Great Crash in 1929? • Why did the Great Crash produce a ripple effect throughout the nation’s economy? • What were the main cause of the Great Depression?

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