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Buying Stocks on Margin• Buying on margin
means to pay a small percentage of a stock’s price as a down payment and borrowing the rest.• Some purchasers were
lent up to 75% of the stocks value.• This worked as long as
stock prices continued to rise.
Speculation• Speculation – The
engagement of risky business transactions, on the chance of a quick or considerable profit.• In this case, risky
stock transactions artificially increased the value of the market.
The Stock Market Crash of 1929• October 29th, 1929
also known as Black Tuesday was the day the market hit rock bottom.• A record 16 million
shares were sold that day.• This crash signaled
the beginning of the Great Depression.
Bank Failures• After the crash,
Americans panicked and withdrew their money from banks.• Many banks lent out
more than they had in reserves so they could not cover their customers withdrawals.• By 1933, 6,000 banks
had failed.
Main Causes of the Great Depression• An old and decaying
industrial base• A crisis in the farm
sector – greater supply than demand• The availability of
easy credit• And unequal
distribution of wealth
The Effect of the Depression on People’s Lives
• People lived in Shantytowns called Hoovervilles.• http://
www.youtube.com/watch?v=GTnVMulDTYA
• People ate at soup kitchens and waited in bread lines.
• Many men abandoned their families and became hobos.• A hobo was a person who rode
trains from town to town.• http://
www.youtube.com/watch?v=NN_xvE79iXE
Relief during the Great Depression• In the beginning of the
Depression under President Hoover, only indirect relief was available• Assistance from private
citizens or religious organizations.
• Under President Franklin Delano Roosevelt (FDR), the government started providing direct relief• Cash payments or food
provided by the government to the poor.