The Great Depression Begins Chapter 14 - Amazon S3

The Great Depression Begins Chapter 14 - Amazon S3

The Great Depression Begins Chapter 14 Section 1 The Nations Sick Economy Section 2 Hardship and Suffering During the Depression Section 3 Hoover Struggles with the Depression Ch. 14 Sec. 1 Objectives To summarize some of the problems threatening the American economy in the late 1920s. To describe the causes of the stock market crash and of the Great Depression. To explain how the Great Depression affected the economy in the United States

and throughout the world. The Nations Sick Economy Section 1 5 Effects of the Great Depression on the American Way of Life and Government Changed American Way of Thinking Government took a more active role in peacetime economies Government assumed responsibility for relief Created the Modern Presidency Created the Welfare State The Rise and Fall of the Stock Market Stock Market appeared very stable and

strong during the 1920s. The # of stocks traded increased steadily. Use of Brokers Loans increased. Money borrowed from banks by stock brokers in order to purchase stock. The stock is used as collateral. Property pledged to guarantee a loan. Some people were worried that stocks were inflated, but most didnt see any problems. The Bull Market In March of 1928, a large group launched a buying campaign on General Motors and Radio Corporation of America. Prices

soared. What is it called when the market prices are rising? Bull Market - Is this a normal market? NO Impact of Speculation Types of Speculators (Very Dangerous) Bulls Those who buy in anticipation of rising prices Those who buy stock when prices are rising and then sell it for a profit when the prices are higher.

Bears Those who sell in expectation of falling prices Investors Those who buy stock as an investment for long terms and who collect dividends. Who Dominated the Stock Market in the 1920s? Buying on Margin Technique used by many speculators. Stock Brokers use a small percent (10-25) of their own money and

borrow the rest from a bank. Brokers Loans are also Call Loans. Loans that can be terminated or called at any time by the lender or borrower. Meant to be short-term. (A few weeks or months) Black Tuesday Summer of 1929 the London Stock Market Crashed Speculators begin to panic and sell stock Prices Fall Speculators begin to panic and sell stock Prices Fall Tuesday, October 29, 1929 the bottom fell out of the market and it crashed.

Dow Jones Industrial Average See Page 467 and 468 Dow Jones Industrial Average the most widely used measure of the stock markets health. Measure based on the stock prices of 30 representative large firms traded on the New York Stock Exchange.

Major Moments Oct. 28-29, 1929 Dow loses of its value in famous Black Tuesday Crash Jan. 1987 Dow breaks 2000 Oct. 19, 1987 Stock Market Crash on Black Monday July 16, 1997 Dow reaches 8000 March 29, 1999 Dow reaches 10,000 Oct. 2007 All time close at over 14,164 History of the Dow Jones @ Economic Conditions 1929-1933

National Income Fell from 87.8 Billion to 40.2 Billion Stock Dividends decreased 56.6% Salaries Decreased 40% Manufacturing Wages Decreased 60% 25% Unemployment Rate Election of 1928 Democrats Alfred E. Smith Republicans Herbert Hoover

Sec. of Commerce Headed Food Adm. During WWI Mining Engineer View Hoover Video @ Career Politician 4 time Governor of New York 1st Roman Catholic to run for President Causes of the Great Depression Stock Market Crash

Slowdowns in Key Industries Agriculture Construction Automobile Uneven Distribution of Wealth High Production of Goods / Lack of Demand People Living on Credit Government Policies

Cut Taxes on Wealthy Cut Loans to Foreign Counties Raised Protective Tariffs (Hawley-Smoot Tariff Act) Non-Enforcement of Anti-Trust Laws Banking System Weak Banking System using funds to invest in stock market

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