The Stock Market Crash of 1929

1
The Stock Market Crash of 1929

• Mr. Wilsons English Class

2
How it Began

• In the 1920s, U.S. corporations, banks and
  individuals recklessly invested their money, even
  borrowed money so that they could invest on the
  stock market.
• Why? Because certain economists from well known
  Universities (Yale, Harvard) theorized that the
  stock market was on a permanently high plateau.
  And for a short while, there was nothing but
  profit
• September 3rd, 1929 The U.S. Stock market had
  reached an all-time high.

3
(No Transcript)
4
Black Thursday

• The Federal Reserve Bank which controls the
  U.S.s financial policy (in Canada it is called
  The Bank of Canada tightened the availability
  of credit (i.e. it increased interest rates).
  This is a standard measure to control inflation.
• In response, most banks and brokers immediately
  demanded payment for their loans, and people
  started cashing in their stocks in order to cover
  their butts.
• By 1pm on Thursday, October 24th 1929, over 12.9
  million shares had been traded, a record loss for
  the U.S. stock exchange.

5
Black Thursday

• Many banks suddenly began investing heavily in
  blue chip stocks (such as U.S. Steel or phone
  companies) in an attempt to stabilize the market,
  this approach had worked in the past.
• Thanks to the media, the U.S. population panicked
  over the weekend, and the haemorrhage continued.

6
(No Transcript)
7
Monday, October 28th, 1929

• The market crashed even further, another record
  13 was lost by the end of Monday.
• Furthermore, there was a rumour floating around
  that President Herbert Hoover would not veto the
  imminent Tariff Bill, which would tighten taxes
  paid on imports and exports.
• This was also supposed to help the situation.
• But amidst the panic and rumours, the market
  continued to plummet.

8
Tuesday, October 29th, 1929

• Black Thursday was eclipsed as the record was
  broken, and 16.4 million shares were sold.
• The U.S. stock market would continue its decline
  for another two years, until July, 1932 it would
  reach a low not seen since the 1800s

9
(No Transcript)
10
Implications?

• At the time, the United States was he leading
  industrial power, producing 45 of the worlds
  manufactured goods, which compounded the
  collapse.
• International consumer buying suddenly declined,
  leading to overproduction (especially in Europe,
  who was trying to keep up with the States and the
  newly industrialized Japan), which further eroded
  the already damaged European economy.

11
Implications?

• One of the biggest problems? Working class wages
  (the central component of a healthy economy) had
  not risen in conjunction to the prosperity of the
  1920s, and suddenly worker wages were
  drastically cut and unemployment skyrocketed.
• By 1933, it was estimated that 14 million U.S.
  workers were unemployed (thats about half of
  Canadas present population), and more than 5000
  banks had closed.

12
(No Transcript)
13
What happened in Canada?

• Because the U.S. is our greatest trading partner,
  Canada was very hard hit during the Great
  Depression.
• The main problem was Canadas economic dependence
  on the export of wheat, where prices fell to
  almost 50 of what it was pre-crash.
• Mackenzie King, the Prime Minister of Canada,
  believed it was not a big deal and refused to
  help the provinces with financial aid.

14
(No Transcript)
15
The Dirty Thirties

• The 1920s were known as the Roaring Twenties,
  but the previous decades decadence would only be
  replaced by hard times.
• Furthermore, the U.S. enacted a policy of
  prohibiting legal drinking.
• This led to some major issues, like organized
  crime!

16
(No Transcript)
17
The Dust Bowl

• From 1930 to 1936, the prairies of central North
  America experienced a severe drought.
• This, coupled with bad agricultural practices
  (like ignoring crop-rotation or cover-crops!) led
  to massive dust storms.
• Known as Black Blizzards or Black Rollers,
  the worst hit States were Texas, Oklahoma, New
  Mexico, Colorado and Kansas.

18
The Dust Bowl

• As a result, many Okies were forced to abandon
  their homes, mostly heading West to California.
• There they found more work, usually picking fruit
  crops, but not with enough pay to really settle
  down.
• This is the main setting for John Steinbecks
  classics The Grapes of Wrath and Of Mice and
  Men.

19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
Thank-You