1 / 14

The Wall Street Crash

The Wall Street Crash. Causes. Many people buy shares in the hope to make quick money If a business is thought to do well in the future, shares are bought to sell later at a profit (called speculating) You buy shares in a business so you get a share of their profits (called a dividend)

debbie
Télécharger la présentation

The Wall Street Crash

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Wall Street Crash

  2. Causes • Many people buy shares in the hope to make quick money • If a business is thought to do well in the future, shares are bought to sell later at a profit (called speculating) • You buy shares in a business so you get a share of their profits (called a dividend) • If the business does well – the shares will rise in value • If the business does bad – the shares will decrease in value

  3. Continued… • In 1929 there was a general ‘BOOM’ as the USA provided loans and goods to Europe to aid in the recovery after WWI • If confidence in the market increases – share prices rise • Ordinary people think shares are easy money so they borrow from banks to buy shares – to sell later for a profit ($9 billion was lent by banks to speculators in 1929)

  4. Continued… • Very dangerous because if share prices fall Speculators will sell off their shares because they owe the bank – cannot risk losing • August/September, Charles Babson predicted there were too many goods and not enough customers – so prices, profits and dividends would fall • 5th September 1929 someone started selling a large amount of shares – this caused people to panic

  5. Continued… • More shares on the market – decreased value • THEREFORE • Confidence in the market is shaken • RESULT • Speculators panic and sell their shares at a loss

  6. Continued… • Eventually shares are worthless – no-one is prepared to buy them • Banks try to buy spare shares to restore confidence in market – doesn’t work • RESULT • Thousands of people left bankrupt • So banks have to close down (1929 – 659 banks close, 1930 – 1352 banks close)

  7. CRASH

  8. Questions – answers to be written in your books • How did the businesses try to keep demand high? • Why did this fail? • What could the government have done to prevent a crash happening?

  9. The Depression

  10. Because of the crash • Speculators are bankrupt • Some banks close (400,000 people lost saving when the Bank of New York crashed in 1930) • Other banks only survive by calling back the loans they had made to businesses • Businesses have to scale down – some even close • Unemployment rises – by 1933 14 million in the USA

  11. Protectionism • Government introduces/increases tariffs on foreign good – this makes them more expensive • Encourages people to by domestic goods • This policy is known as ‘Protectionism’ because it is about ‘protecting’ your home economy • This means foreign businesses suffer from the decrease in trade with the USA • Reduces market confidence – share prices start to fall

  12. Political consequences • Democracies become inward looking and defensive • USA • Britain • France • Dictatorships become aggressive and expansionist • Germany • Italy • Japan

More Related