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Events and Ideas #2 The Crash US History Unit 4 Essential Question: • Explain the immediate causes and effects of the: –Stock market crash –Banks closing –People losing their savings Stock Market Crash • Later half of 1929, stock market starts to run out of new investors. • Professional investors start to sell off stocks. • Prices start to dip causing panic selling • Stocks are dumped. October 24th, 1929 (Black Thursday) • Stocks fall drastically • Brokers panic • General Electric stock falls from $400 a share to $283 a share • Brokers make margin calls – no one can pay Black Tuesday • https://www.youtube .com/watch?v=ehy2jE eNuWk Black Tuesday • October 29th, 1929 • Stocks plunge again • Value of market falls • People sell what’s left to get some money • October 29th, 1929, $10 to $15 billion in stock value is lost. (15,000,000,000) • By November, $30 billion has been lost • Thousands lose everything The Stock Market Crash • On “Black Tuesday” Oct 29th, 1929, the Stock Market in NYC crashed. • The initial crash actually occurred on “Black Thursday” Oct 24th, 1929. People outside New York Stock Exchange on Black Tuesday Banks • Because banks had loaned money to stock speculators, and then invested depositor’s money in the stock market… • …when margin called came due and all of the loans were called in, there wasn’t enough money to pay off all of the loans. Banks Closed • People got scared started to pull their money from banks. • The banks ran out of money… Immediate Effects of the Crash • Many lost life savings in the stock market crash • Banks and brokers call in loans – American people don’t have money to pay back loans or margin • Banks are not prepared for people to withdrawal money at the same time • No bank insurance • What were two ways people lost money at the end of 1929? Hundreds of Banks Close People line up outside a bank hoping to get their money out • Customers that were more responsible and did not buy on margin or credit lost their savings that were in the bank when banks closed. • 9 million savings accounts vanish In early 1930, there were 60 bank failures per month. Eventually, 9,000 banks closed their doors between 1930 and 1933. Each time a bank failed, a large amount of money disappears from the economy Add to your list… Causes of the Great Depression: 7. Stock market crashes 8. Banks close 9. People lose their savings The Great Depression Begins U.S. Economy • In the first four years of the Depression, the GDP (Gross Domestic Product) fell by 30% from 1929 to 1933. • The U.S. Stock Market lost 90% of its value. Many did not realize how severe the downturn was until 1932, when the economy had technically “hit bottom.” Businesses • Many companies stocks lose value, thus losing money • Businesses are no longer have money to run the company • Many people are laid off • Many companies go bankrupt and have to close their doors. Unemployment Skyrockets • 12 million people are out of work Unemployed workers in front of a shack with Christmas tree in NYC Add to your list… Causes of the Great Depression: 10.People lose their jobs – Unemployment in the U.S. raises to 25% by 1933 Hoovervilles • • • • People lose jobs Homes and property seized due to non-payment of loans Shantytown start to appear across the American landscape. Blaming the president, people referred to them as Hoovervilles. Hobos - Hunger • “Hobos” wander the countryside. • People stand in breadlines…and soup kitchens Essential Question: • Explain the immediate causes and effects of the: –Stock market crash –Banks closing –People losing their savings