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• 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.

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

The Business Cycle

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?

Impact_________ Lost Money

Could not pay back _______

_____ were forced to close

9 million ________ _______ vanished

Called in _____ of non-

investors

Left with nothing

“____” on the Bank

Impact_________ Lost Money

Had no _______ to buy goods

Factories had to cut back _________

Millions left ________ or ____________

By 1932, 12 million were unemployed

GNP fell from $103 billion in 1929, to $56 billion by 1933

•Small businesses closed

•House servants dismissed

•Farm prices plummeted

ImpactInvestors Lost Money

Could not support _______ markets

America called in ____ ______ and

raised tariffs

Europeans could not afford to buy ________

_______

Allies had to rely on German reparations for

income

Could not invest in Germany, so German reparation payments

ceased

Sparked European

Depressions

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

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?