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The Great Depression: Stock Market Crash & Economic Collapse

Explore the timeline and key events of the Great Depression, including the stock market crash, unemployment, food riots, and government intervention. Understand the causes and effects of this devastating economic downturn.

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The Great Depression: Stock Market Crash & Economic Collapse

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  1. Agenda 3/9/10 • Go over time line • Go over 9.1 Study Guide/ lecture notes • 9.2 Outline

  2. Timeline • Oct 1929 – The stock Market Crashes • Nov. 1929 – An estimated $30 billion in stock values are gone • March 1930 – 3.2 million Americans unemployed • Nov. 1930 – The unemployed take to the streets of NY, selling apples • Jan 1931 – Food riots break out

  3. Timeline • March 1931 – 3,000 unemployed workers march on the Ford plant • Dec. 1931- The NY Bank of the US collapses • Jan 1932- Congress establishes the RFC • July 1932 – The RFC is authorized to lend money to states from the National Treasury • Nov. 1932 – FDR elected by a landslide

  4. 9.1 Study Guide • When Calvin Coolidge decided not to run in 1928, he cleared the way for Herbert Hoover to head the Republican ticket. • The Democrats chose Alfred E. Smith , an Irish American from New York’s Lower East Side, and the first ever Roman Catholic nominated for president. • Prohibition was a major issue in the 1928 elections

  5. 9.1 Study Guide 4. Many Protestants were willing to believe that the Catholic Church financed the Democratic Party and would rule the United States if Smith were elected. 5. Because of the bull market, by 1929 about 3 million Americans , or roughly 10 percent of households, owned stocks.

  6. 9.1 Study Guide 6. Many investors bought stocks on margin , meaning they made only a small cash down payment with the rest coming as a loan from a stockbroker.

  7. Example of buying on Margin • $10,000 worth of stock only cost an investor $1,000. The other $9,000 was a loan from the stockbroker. • The stockbroker earned commission on the sale and interest on the loan • When the stock market was strong it didn’t take long for the $10,000 worth of stocks to rise to $11,000 or more • The investor could then sell the stock, pay off the loan and still make $1,000

  8. 9.1 Study Guide 7. A problem arose if the stock began to fall in price, causing the broker to issue a margin call, demanding the investor repay the loan at once.

  9. 9.1 Study Guide 8. The stock market slide was not the major cause of the Great Depression, but it undermined the economy’s ability to hold out against its other weaknesses. Copy into Additional Notes

  10. 9. Another way the crash weakened the banks was that many banks themselves had taken depositors’ money and invested it in the stock market , hoping for higher returns than they could get by using the money for conventional loans.

  11. 9.1 Study Guide 10.A bank run takes place when many depositors decide to withdraw their money at one time, usually for fear the bank is going to collapse. 11. Most economists agree that overproduction was a key cause of the Depression.

  12. Cyclical Effect of Overproduction Copy into Additional Notes

  13. 12. Many people who had bought high-cost items such as refrigerators on the installment plan reached a point where paying off their debts forced them to reduce other purchases.

  14. 9.1 Study Guide 13. When sales of goods slowed, manufacturers cut production and laid off employees . 14. The Hawley-Smoot Tariff raised the tax on many imports to the highest level in American history, and reduced American sales abroad.

  15. In Summary… Copy into Additional Notes • In an election marked by religious prejudice and the issue of prohibition, Herbert Hoover won the presidency by a landslide. • The long period of rising stock prices led many people to risky investment practices • The October 1929 stock market crash led to bank failures across the nation • An uneven distribution of income, the lack of foreign markets for export and the Federal Reserve’s mistakes contributed to the Great Depression.

  16. Great Depression Begins – Summary Assignment • Complete the assignment on you OWN sheet of paper. (Below your 9.1 additional notes) • Set up your paper exactly like the graphic organizer on the sheet. • Yes, you need to do the Critical Thinking! • This assignment goes in your NOTES section.

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