Great Depression

Stock Market : a system of buying and selling shares of a company . You can buy a “stock” of a company - kind of like a loan, when the company does well, the value of a stock goes up, and you can sell it for more than you bought it

In the 1920’s the stock market was doing very well –companies were flourishing so people invested very heavily in stocks Some people even took out loans (borrowed money to pay back later) from banks to buy stocks

Although companies did very well during the 1920’s – a period of “boom”ing industry and business – eventually it came to an end Ex: If refrigerators are a hot commodity and costs are high, once you have one – you don’t need another one, so eventually the refrigerator business started to even out

What does this mean for stocks? People began to buy a lot of stocks at a high price, expecting to sell them at a higher price, however, because companies were not doing as well towards the end of the 1920’s, people could not sell their stock for even close to the price they bought it for Stock market began to decline – no one was buying stocks Eventually stock market “crashes” -1929

Now what? People lose all kinds of money because the stocks lost a lot of their value People couldn’t pay back loans they borrowed from banks – banks started to fail Banks invested heavily in stock market, too so they were losing money People panicked and tried to take out all of their savings at once (banks run) – banks didn’t have their money

Federal Reserve (government bank) was supposed to maintain a stable financial system They refused to “bail out” banks and give them money People were losing jobs People lost life savings

What actually caused the depression is that this all happened at once- may not have happened if just one or two happened : =companies fail =stock market crash =banks crashed

2. What was the Hawley Smoot Tarriff? https://www.youtube.com/watch?v=GCQfMWAikyU What does John Green argue is the number one cause of the Great Depression? 2. What was the Hawley Smoot Tarriff? 3. What did the Hoover Administration do to help the Depression?

1. weak banking system 2. raised tariffs on imports to encourage people to buy domestically ( from each other!) 3. Not much.