Stock Market Crash &the Great Depression

Mr. KochUS History B

Forest Lake High School

Warning Signs

• Uneven prosperity of the 1920s– Was primarily rich getting richer• Often saved or invested

Warning Signs• Overproduction– Production outpaced demand• Caused some industries to slow

• Buying on credit– People buying what they

couldn’t afford• Payment plans

Warning Signs

• Playing the stock market– Optimism fueled hopes to “get-

rich-quick”• Over-speculation

– Included many ordinary people investing more than could afford• “buying on margin”

– borrowing $$$ to pay for stocks

Warning Signs• Problems for farmers– Decline in demand after

WWI led to decreasing prices• Couldn’t pay debts for land/machinery

• Problems for workers– Many still worked long hours for low wages in bad conditions

Stock Market Crash of 1929

• With investment craze, stock prices rose to all-time high in Sept 1929– Many prices inflated well over real value of

earnings

Stock Market Crash of 1929

• Black Thursday – Oct 24, 1929– People became worried, began to sell, prices

dropped

Stock Market Crash of 1929

• Black Tuesday – Oct 29, 1929– Panicked investors sold off stocks

like crazy• Prices collapsed

– $30 billion in total losses– Many people lost everything • Some lost even more

– Was the “trigger” of the Great Depression (not the sole cause)

The Fallout

• As profits decreased, factories closed & people lost their jobs– With less $$$ to spend, more businesses were

hurt and/or closed

The Fallout• Banks– Nervous Americans tried

to withdraw deposits in large numbers• Many banks failed and

closed – people lost their money

The Fallout

• Global economy was connected to U.S.– European economy was hurt

• In addition, there was no govt “safety nets” for people to fall back on