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*Causes of the Stock Market Crash*
+Overspeculation during the 1920's - speculators are people who are in it for the short term, overspeculation led to high demand which made them over priced
+Buying on margin brought a lot more people into the stock market
+Rich got richer, the poor got poorer
+Companies were making tons of goods but no one was buying so they lost money and eventually had to shut down or fire people
Effects stock market crash had on our country:
- Banks failed and closed
- People lost their life saving or a lot of their money
- Businesses closed
- People lost their jobs so they couldn't buy anything
- Investors and businesses lost millions of dollars
- Unemployment rises - people quit spending money
- Great Depression
- Depression spreads to Europe and other parts of the world
*Causes of the Great Depression*
"Vicious Cycle of the Great Depression" - companies lose money, companies lay off workers, more people with less money to spend (Rinse & Repeat)
- Overproduction of goods
- Underconsumption of goods by customers
- Agricultural slump due to overproduction
- High protective tariff policies of the 1920's - tarrif is a tax on imported goods from other countries
- The goal of a high tariff is to keep foreign competition out so people buy more american goods
- Taxes benefiting the rich - rich got richer, poor got poorer
- Stock Market Crash fueled the Great Depression
Effects of the Great Depression
- New Deal programs start - makes the US government much larger
- Deficit spending starts - spending more money than you take in
- The New Deal creates many organizations that are still around today - social security (SCC)
- Facist, military and communist dictators come to power throughout the world - Adolf Hitler
- Great Depression around the world started WWI
1. 1928 Election(466)
Herbert Hoover (R) - Winner!
Al Smith (D) - New York
2. Stock Market in the 1920's(466-468)
Stock is a part of a company so if you own a stock then you own that part of the company. Make money by dividends when the company is doing well. When you buy a stock at a low price then the value goes up. Dow Jones was created by Charles Jones. Top companies in the stock market are AT&T, Coca Cola, IMB, McDonalds, Microsoft, Walmart, Walt Disney, Verizon, and others. Stocks became way over priced.
3. Story of the stock market crash-not the causes(467-469)
We based our economy on credit and eventually people stopped paying for their stocks. Everyone wanted to be apart of the stock market and eventually couldn't afford anything anymore. They got many of their belongings repossessed. In March of 1929, there was a day when the stocks dropped significantly, Charlie Mitchell was head of one of the major banks in New York City. He tried to encourage people to buy stocks and bought many himself. He was a hero becaus he 'saved' the stock market. Then in October, stock market dropped again. Mitchell tried to save the day again along with many other bankers. He believed he could pull the stock market back up, things rebounded a little bit. Days later, the bottom fell out of the stock market.
4. Banks and business' collapse(469)
9,000-11,000 banks failed during the 1930's. Unemployed rose from 3%-25%. 90,000 businesses shut down in the early years of the stock market crash.
5. Effect stock market crash had on other countries(469-471)
6. Depression in the cities(472-473)
"Hoovervilles" were named after Herbert Hoover because they believed he was to blame for the Great Depression.
7. Depression in the rural areas(473)
Farmers didn't get paid a lot. Farms were taken away from them a lot of the time because they didn't pay so the bank took them. Red Cross set up stations so the homeless could get food.
8. Dust Bowl(474)
9. Men in the Streets(475)
10. Women struggle to survive(475-476)
11. Children suffer hardships(476)
12. Social and psychological effects(477)
13. Hoover's background
14. Hoover's philosophy/Cautious steps(479)
15. Boulder Dam(480)
16. Democrats win 1930 Congressional elections(480)
17. Hoover takes action(481)
18. Bonus Army(482-483)
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