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The Downward Spiral

The Downward Spiral. The Stock Market Crash Chapter 22 Section 1. 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?. Black ________ —October 29, 1929

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The Downward Spiral

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  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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