The 1929 Stock Market Crash, Bank Failures and the Great Depression.

The 1929 Stock Market Crash, Bank Failures and the Great Depression

Causes of Black Tuesday

•Buying stocks on margin•Overexpansion of credit• Speculation

Buying Stocks on Margin• Buying on margin

means to pay a small percentage of a stock’s price as a down payment and borrowing the rest.• Some purchasers were

lent up to 75% of the stocks value.• This worked as long as

stock prices continued to rise.

Overexpansion of Credit

• When people are approved for credit that they should not qualify for.

Speculation• Speculation – The

engagement of risky business transactions, on the chance of a quick or considerable profit.• In this case, risky

stock transactions artificially increased the value of the market.

The Stock Market Crash of 1929• October 29th, 1929

also known as Black Tuesday was the day the market hit rock bottom.• A record 16 million

shares were sold that day.• This crash signaled

the beginning of the Great Depression.

Bank Failures• After the crash,

Americans panicked and withdrew their money from banks.• Many banks lent out

more than they had in reserves so they could not cover their customers withdrawals.• By 1933, 6,000 banks

had failed.

The Great Depression• The period of severe

economic decline between 1929 and 1941.

Main Causes of the Great Depression• An old and decaying

industrial base• A crisis in the farm

sector – greater supply than demand• The availability of

easy credit• And unequal

distribution of wealth

The Effect of the Depression on People’s Lives

• People lived in Shantytowns called Hoovervilles.• http://

www.youtube.com/watch?v=GTnVMulDTYA

• People ate at soup kitchens and waited in bread lines.

• Many men abandoned their families and became hobos.• A hobo was a person who rode

trains from town to town.• http://

www.youtube.com/watch?v=NN_xvE79iXE

Relief during the Great Depression• In the beginning of the

Depression under President Hoover, only indirect relief was available• Assistance from private

citizens or religious organizations.

• Under President Franklin Delano Roosevelt (FDR), the government started providing direct relief• Cash payments or food

provided by the government to the poor.