warm-up people who own stock in companies may receive cash payments based on how much profit the...
TRANSCRIPT
Warm-UpPeople who own stock in companies may receive
cash payments based on how much profit the companies make.
Name 2 companies you would invest in.
Homework Check
8-2 Mosaic
The Crash
Chapter 8 - 2
Prior Information From Last Chapter
Prosperity in the Roaring 20’s
Economy
What goes up must . . .
Prior Information From Last Chapter
Prosperity in the Roaring 20’s
EconomyIndustry Booms
producing large quantities of goods
& jobs
Incomes RisePeople buy more products and buy
on credit
Bull MarketMore people buy stocks than ever
before
What goes up must . . .
FarmingDuring WWI farms produced goods selling them to Europe
8-2
The Crash
The Stock Market
The CrashCauses of the Great
Depression
The Stock Market
• 1920’s wealth was on paper not actual money in the bank.
– Stocks (shares) in companies
– Shares were bought and sold on the stock market
• Investors were buying stocks on margin
– Paid 10% and borrowed the rest
– Idea = stocks prices go up sell the stock with enough money left over to cover the loan
• Stock prices started to fall. Investors begin to sell.
Sell
sellsell
sellsell
The Crash• More investors saw the value of stocks fall, more sold.
• Stock market dropped sharply and kept dropping.
• October 29, 1929 - “Black Tuesday” – 2-4 times as much selling as usual.
• The stock exchange – where stocks are bought and sold –closed for two days
The Great Depression BeginsGreat Depression – period of very little business
activity, very high unemployment, and falling wages and prices.
54.40%
12.50%
13.80%
19.30%
Income distributionEarned by 5.3
million families
Earned by 5.3 million families
Earned by 10.6 million
families
Earned by 5.3 million
families
Over ProductionFarms & Factories make goods faster
than people can buy them
Weak Banking SystemBank failures due to bad
loans made to people who can’t pay them back
Uneven Distribution of WealthBig Discrepancy of Rich & Poor. No savings, can’t buy the goods the factories are making, nothing to live on or pay off debts if job is lost.
Production CutsLead to wage cuts and laying off workers now people have less money to spend
Causes of the Great Depression
The stock market crash did NOT cause the Great Depression!
Other nations suffering hard times and can’t buy U.S goods also hurts our economy
Left SidePlot the following informationTitle – Stock Prices, 1920-1932X axis – Years - 1920-1932 in 1 year increasesY axis – Dollars per share in 50 dollar increases 0-400
1920 – 1251921 – 1001922 – 1301923- 1321924 – 1331925 – 1511926 – 1801927 – 2001928 – 3251929- 3751930 – 3001931 - 2451932 - 75
What your graph should look like
1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 19320
50
100
150
200
250
300
350
400
Stock Prices 1920-1932
Year
Dol
lars
per
sha
re
What your graph should look like
1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 19320
50
100
150
200
250
300
350
400
Dollars per share
10 minute write
Imagine you had invested your life savings in the stock market. How would you have felt on
October 29th? What would you do?Write 7 lines that includes each of the following words to explain how you feel as you watch the
stock market fall.
Crash, stocks, margin, stock exchange, depression, over production