Objective: To examine the causes of the Great Depression Do Now: How did an increase in wages help cause an economic boom?

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Presentation transcript:

Objective: To examine the causes of the Great Depression Do Now: How did an increase in wages help cause an economic boom?

Some Basic Background on the Stocks and the Economic Market

What are Securities? Securities can be either stocks or bonds which are sold and bought on the stock market.

What is the New York Stock Exchange? World’s largest market place for securities Currently membership limited to 1,366 members. Seat obtained by purchasing from existing member

Interesting Fact: How did Stock Exchange begin? The Exchange evolved from a group of men who used to meet under a buttonwood tree on what is now Wall Street in 1792 to discuss securities

The Great Bull Market Great American stock exchange boom of Huge bubble where there were high speculations People made many investments to make big money

Stock Exchange Average Rise in Share Prices

I. Stock Market Crash On Tuesday, October 29, 1929, stock prices plummeted. This became known as Black Tuesday.

General Causes of the Crash Rampant over speculation in market People holding companies and investment trusts (which by nature creates debt) Bursting of Bull Market economic bubble in August 1929 Large bank loans could not be liquidated

Black Thursday On October 18, 1929 prices began to fall Panic stuck out on October 24 “BLACK THURSDAY” after the announcements from the Senate Record of 12,894,650 shares were traded

Black Thursday (Continued) Major banks and investment companies bought up great blocks of stocks to stop the panic but…. THERE ATTEMPTS FAILED!!!!!!!!!

Black Monday and Tuesday The Panic continued and 16,000,000 shares were traded Prices on the stock market collapsed completely!!!!

Causes of Great Depression Agriculture had crashed in 1919 and was a continuing source of weakness. Banks over-extended Wages had not kept up with profits In 1920’s consumers were reaching limits of ability to borrow and spend

Cause’s of Depression (continued) Production was declining and unemployment increasing EVEN before the crash! Destroyed confidence in the economy Down sizing of industry causing unemployment

The Great Depression The stock prices in the next three years continued to fall By 1932 prices had dropped to only about 20% of there original value

“Cycle of Disaster” – many businesses went bankrupt Businesses cut production Workers suffered from wage cuts and lay offs. People had little or no money to spend. Demand for goods fell.