1. 3. What were the causes and consequences of the Wall Street Crash? a.How far was speculation responsible for the Wall Street Crash? b.What impact did the Crash have on the economy? c.What were the social consequences of the Crash? d.Why did Roosevelt win the election of 1932?

3. Companies need money to pay for equipment and staff, etc. They raise this money from investors – people who are prepared to put money into a company in exchange for shares in that company. When they do this, they become shareholders in the company. The shareholders then get a share of the profit the company makes. This payment is called a dividend and is usually paid once a year. Shareholders can sell their shares in the company on the stock market. The stock market in the USA is based on Wall Street.

4. The price of shares changes from day to day. If a company is doing well, there will be a demand for shares in it and therefore the price of those shares will be high But the price can also change no matter how the company is doing. If a lot of people want to buy the shares the price will go up. If lots of people start selling their shares and not so many people want to buy them, the price will go down

5. People waited for share prices to go up (which, as we have seen already, they usually did during the 1920s), then resold the shares, paid back the loan they had taken to buy them, and made a profit By the summer of 1929 there were 20 million people in America who owned shares and prices continued to rise But in October 1929 things began to change. Some people realised that share prices had risen too high and wanted to sell before they fell... http://www.youtube.com/watch?v=ZmUS5BVr_mY

7. To set up a new company you need ……………… This will go towards …………… staff and ………… equipment. Most companies raise this money from …………………… These people buy a …………… of the company. These people, known as …………………………, make their money by receiving a share of the company’s ……………, or by …………………… their share. If the company has been successful then the value of their share is usually ……………………… than what they originally paid for it. Investors buy and sell their shares on the ………………………… The American stock market is known as ………… ……………… Wall Street Investors Paying Shareholders Buying Money Stock Market Share Higher Selling Profits

8. Explain how speculation caused the Wall Street Crash One reason speculation caused the Wall Street to crash was the fact it led to inflated prices. People were convinced that they would make money on the stock market so bought shares at any cost. This forced share prices to rise to an unrealistic height. Some experts realised that share prices did not match up to the share in the company that they were buying into so sold their shares. This caused share prices to fall and everyone started selling their shares which in turn led to the Wall Street Crash. Another reason speculating caused the Wall Street Crash was because they were gambling with money that was not theirs. They were being irresponsible with other people's money, If they lost money on the stock market it was the banks that suffered. This would mean that people would lose money meaning they needed to sell their shares, thus decreasing the value of shares Another reason why speculation caused the Wall Street Crash was because of the sheer number of uneducated people playing on the stock market These people did not understand how stock and shares really worked, In fact 20 million Americans were playing the stock market. They were not really interested in the company they were a shareholder of therefore they did not care about the future of that company. They were not regulated and could sell at any stage. Another reason is that people speculating could buy only a small percentage of their share as a down payment if they wanted to. This means that when share prices started falling people would not pay the rest of their payments meaning that the company would not be able to sustain itself and its stock valuation would drop even further Overall the main reason why speculation led to the Wall Street Crash was because….

9. DESCRIBE the weaknesses in the US economy leading up to the Wall Street Crash EXPLAIN why these weaknesses led to the Wall Street Crash 3. What were the causes and consequences of the Wall Street Crash? a.How far was speculation responsible for the Wall Street Crash? – Other factors Poor distribution of wealth between rich and poor Overproduction by American consumer goods industries The actions of speculators No export market for US goods The decision by banks not to support share prices In June 1929 the official figures for industrial output showed a fall for the first time in four years. This led to nervousness on the stock market about the value of shares and people began to sell. This meant that there was a huge proportion of Americans who couldn’t afford to buy things, even on the credit schemes available, which meant that goods being produced weren’t being sold to those who might actually want them. Whereas previously, US companies had sold their surplus to Europe, they now found that governments there put their own tariffs on imports, meaning they were stuck with goods they couldn’t sell. The market for these goods had mainly been the rich and middle classes, but those who could afford them had already bought them by 1929. When share values started to fall in October, banks initially bought shares to stabilise prices. But by October 29 th it was apparent that they had stopped doing this, so panic selling began.

12. 3. What were the causes and consequences of the Wall Street Crash?

15. Businesses need money. They have to buy raw materials, equipment and machinery. They must pay wages. They can raise money by selling goods or borrowing. 3. What were the causes and consequences of the Wall Street Crash? b. What impact did the Crash have on the economy? The financial and economic effects of the Wall Street Crash:

16. The Crash made both of these much more difficult. Many people had lost a great deal of money and now had less to spend. So companies made fewer goods, and needed fewer workers and factories. As a result, unemployment rose rapidly. The financial and economic effects of the Wall Street Crash: b. What impact did the Crash have on the economy? 3. What were the causes and consequences of the Wall Street Crash?

17. Borrowing money was no easier. Who would want to lend money when so many businesses were failing? You would never get it back. In any case it was often the banks themselves that were going broke – 5000 of them closed in the three years after the Crash. The financial and economic effects of the Wall Street Crash: 3. What were the causes and consequences of the Wall Street Crash? b. What impact did the Crash have on the economy?

18. By 1932, a quarter of the working population was unemployed. As many as a third of the population were members of families in which the breadwinner was out of work. By 1933 production of manufactured goods was barely 20 per cent of its 1929 level. The economy was ceasing to function. The financial and economic effects of the Wall Street Crash: 3. What were the causes and consequences of the Wall Street Crash? b. What impact did the Crash have on the economy?

20. 3. What were the causes and consequences of the Wall Street Crash? c. What were the social consequences of the Crash? Homelessness Unemployment

21. 3. What were the causes and consequences of the Wall Street Crash? c. What were the social consequences of the Crash? Soup kitchens

22. 3. What were the causes and consequences of the Wall Street Crash? c. What were the social consequences of the Crash? Hoovervilles

23. 3. What were the causes and consequences of the Wall Street Crash? c. What were the social consequences of the Crash? D B onus Marchers ust bowls

24. Like most businessmen, Hoover assumed that all America had to do was to wait while the economy naturally corrected itself It soon became obvious however that doing nothing would not be enough. The USA was in the grip of an economic depression far bigger than it had experienced before 3. What were the causes and consequences of the Wall Street Crash? b. What impact did the Crash have on the economy?

25. Hoover’s response: Pleaded with employers not to reduce pay or sack workers Reconstruction Finance Commission: loans to businesses States and cities encouraged to make jobs for unemployed Federal Farm Board bought extra crops to hold up prices Cut taxes to encourage people to buy more goods These were good ideas in principal but Hoover didn’t believe in them and they didn’t go far enough. Some of his policies made things worse – the Harley- Smoot tariff placed higher taxes on imports and encouraged other countries to do the same, which made it even harder for US manufacturers and farmers to export their surplus 3. What were the causes and consequences of the Wall Street Crash? b. What impact did the Crash have on the economy?

27. 3. What were the causes and consequences of the Wall Street Crash? d. Why did Roosevelt win the election of 1932?