chapter 12 – section 2
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Chapter 12 – Section 2. The Stock Market Crash. Dow Jones Industrial Average. The average of stock prices of major industries By Sept. of 1929 it reached an all-time high of 381. Black Tuesday. October 29, 1929 - PowerPoint PPT PresentationTRANSCRIPT
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THE STOCK MARKET CRASH
Chapter 12 – Section 2
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Dow Jones Industrial Average
The average of stock prices of major industriesBy Sept. of 1929 it reached an all-time high of
381
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Black Tuesday
October 29, 1929After stock prices started to decline
people panicked and sold all their shares before they were worth nothing
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The Great Crash
As a result of everyone pulling out of the stock market it completely collapsed losing $30 billion
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Why such a big deal?
Brought to a sudden end the economic expansion of the 1920’s
Began the Great Depression
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Effect on Middle and Upper class families
They had invested everything hoping to make millions, but instead lost all their life savings
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The Great Depression
A severe economic decline that lasted from 1929 until the U.S. entered WWII in 1941
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Factory Closings
Millions of people took major pay cuts or lost their jobs
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Unemployment by 1932
12 million 25% of workforce (1 in 4 people)Unlike today, U.S. had no unemployment
insurance so you were on your own
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The Gross National Product (GNP)
The total value of all goods and services a country produces annually
Went from $103 billion in 1929 to $56 billion in 1933
Cut in half!
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How did the effects of the Crash spread?
Restaurants and other small businesses closed because people couldn’t afford anything
Once wealthy families let household workers go
Already low farm prices went even lower
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Bank Crisis
Thousands of banks closed because everyone rushed to take their money out
Banks didn’t have it since they had loaned it out
Money from 9 million savings accounts vanished
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Effect on World Economy
Europeans relied on reparations from Germany to pay their loans back to U.S.
We stopped investing in German companiesGermany couldn’t pay reparationsEuropeans couldn’t pay us back
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*5 Effects of the Great Depression
1. Millions of workers lose their jobs2. GNP falls dramatically3. Many banks fail4. Increased poverty leads to health and
social problems5. Global economy suffers