Monday-Last presentation of the 1920's to be done today. discuss stories done by forum post leaders. Summary of the 1920's in general.
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13.-Stock Market Crash-causes
- Stocks and stock market: a stock is a type of security that signifies ownership in a cooperation and represents a claim on part of on part of the cooperation assets and earnings
- Stock market: Market of exchange of stock
- Stock market crash:a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of money causing mass panic
- Credit boom: Rapid expansion of lending by financial institutions. People got loans from the bank to buy stock and were unable to pay back when loans are due
- "buying on the margin': You could pay 10-20% of a share and meant you were borrowing 80-90% of shares. Effect of this was getting more per share. This created the 'Margin millionaire' so once the stock profits fell it wipes most of them because they owed large amounts of money
- Mismatch between production and consumption:over production. companies were making all of the productions, people were unable to buy all of these things once they lost all of their money in the crash, left over products.
- Weakness in the bank system: 30,000 banks in america, prone to becoming bankrupt if they run out of funds/deposits, many banks in rural areas went bankrupt due to agricultural recession (over production of farm goods)
- Overview: October 24th-12,894,650 shares were traded, October 29th-wall street investors traded in 16 million shares billions of dollars were lost and thousands of investors wiped out, Unemployment before-1,550,000 people, unemployment after-12,830,000 people (at peek of depression) over half of US banks shut down.
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