1. The Stock Market Crash of 1929
Essential Questions:
• Why did the Stock Market Crash of 1929 occur?
2. 1920s: An Era Ends
Serious economic
problems began to
threaten prosperity
Farmers grew more corps
& raised more livestock
that they could sell at a
profit
Consumers and farmers
were going deeper into debt
It signaled the end of an era
Basic industries such as
the railroads, textiles, and
steel were barely making
a profit
3. Agriculture
Agriculture suffered the most
During World War I prices rose
and international demand for
crops (such as wheat and corn)
soared
Farmers had planted more and
taken out loans for land and
equipment
After the war demand fell and
crop prices declined
Many lost their farms when
backs foreclosed and seized
the property as payment for the
debt
4. Consumers and Farmers
As farmers’ incomes fell they
bought fewer goods and
services
They were buying less due to:
Rising prices
Stagnant wages
Unbalanced distribution of
income
During the 1920s the rich got
richer and the poor got poorer
Between 1920 and 1929 the
income of the wealthiest 1% of
the population rose by 75%
Compared with a 9% increase
for Americans as a whole
5. Herbert Hoover
Hoover won in an
overwhelming victory
against Democrat Alfred
E. Smith in the election of
1929
Hoover claimed in his
campaign that America
was “nearer to the final
triumph over poverty than
ever before”
By 1929 most Americans
still had a huge trust in the
nation’s economic health
6. The Stock Market
The Dow Jones Industrial Average was
the barometer of the stock market’s health
Measure based on the stock prices of
30 large firms trading on the NYSE
Through the 1920s stock prices rose
steadily
By 1929 about 4 million Americans, or
3% of the nation’s population, owned
stock
People began engaging in speculation
They bought stocks and bonds on the
chance of a quick profit, while ignoring
the risks
Many began buying on a margin
Paying a small percent of a stock’s
price as a down payment and
borrowing the rest
7. The Crash
On October 24th, 1929 the market
took a plunge
Panicked investors unloaded their
shares of stocks
Black Tuesday
October 29th, known as Black
Tuesday
Shareholders dumped 16.4 million
shares of stocks
People who had bought stocks on
credit were stuck with huge debts
Others lost most of their savings
By November investors had lost
about $30 billion dollars
The Crash of the stock market
singled the beginning of the Great
Depression (1929-194)
8. Bank and Business Failures
After the crash many people
panicked and withdrew their
money from banks
Some couldn’t get their money
because the banks had
invested in the stock market
By 1933 11,000 of the nations
25,000 banks had failed
Millions lost their savings
Nearly 90,000 businesses went
bankrupt
Unemployment skyrocketed
9. Causes of the Great Depression
There is no one definitive
cause of the Great
Depression
Most historians and
economists cite:
Tariffs and war debt polices
that cut down the foreign
market for American goods
A crisis in the farm sector
The availability of easy
credit
An unequal distribution of
income