The 1929 Stock Market Crash Bank Failures and

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 29 th, 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/w atch? v=GTn. VMul. DTYA • People 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/w atch? v=NN_xv. E 79 i. XE

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.