Stock+Market+Crash+of+1929

We will discuss what stock is, how you buy and sell stocks, and how the stock market works. We will also talk about the stock market crash of 1929. By the end of the opener, you should have the following four terms defined on your wikispaces:
 * Opener**:

Stock Shares Gross National Product (GNP) Buying on margin

Use the following passage taken from our online textbook to help you take brief notes on the effects of the stock market crash. Use the two column note table below and include a main idea and summary.
 * Lesson**:


 * Use bullet points and put your notes into your own words*



After sharing questions with a partner or group insert the CCQ that you think is the best in this box || Main Idea: This should always start with a date or time period. It should be a complete sentence || Use the following sentence stems to start your questions, comments and connections
 * Topic: Effects of the Crash ||
 * My best CCQ….
 * CCQ’s

This reminds me of.....because

I agree/disagree with....because

I wonder if....

I predict that........ || Notes

__Impact on individuals:__

__Effects on banks:__

__Effects on business:__

__Effects overseas:__ ||
 * Summarize the effects of the stock market crash on Americans: Start your summary with your main idea and add detail. Include the most important key terms/people ||

In the aftermath of the crash, business and political leaders rushed to calm the panic and reassure the nation. One business executive wrote optimistically in the days following Black Tuesday, "The recent collapse of stock market prices has no significance as regards the real wealth of the American people as a whole." President Hoover also downplayed the effects of the crash. He and many others firmly believed that the economy would soon recover from the shock and return to prosperity.
 * The Effects of the Crash **

No one denied, however, that the stock market collapse had ruined many individual investors. Some had lost years of gains. Huge fortunes disappeared before their eyes. Margin buyers were particularly hard hit. When stock prices began to fall, brokers demanded that they pay back the borrowed money. To meet these margin calls, investors were forced to sell their shares for far less than they had paid for them. Some lost their entire savings trying to make up the difference. In the end, investors often owed enormous amounts of money to their brokers for stocks they had been forced to sell below cost.
 * The impact on individuals **

The stock market crash triggered a banking crisis. Frightened depositors rushed to withdraw their money, draining banks of funds. Worse, many banks had themselves invested, directly or indirectly, in the stock market. They had purchased stock in companies whose shares were now crumbling in value. In addition, banks had made loans to stockbrokers, who in turn had loaned the money to investors on margin. When individual investors failed to cover their margins, the banks absorbed losses too. These loan failures eventually drove many banks out of business. As you will read in the next section, the struggles of the banks would have a deep impact on the American people.
 * Effects on banks **

The crash delivered a crushing blow to already struggling businesses. With money scarce, banks and investors were suddenly unwilling or unable to provide industry with the money it needed to grow and expand. At the same time, consumers cut back their spending on everything but essential purchases. With consumers spending less, many companies began to lay off workers. Unemployed workers had even less money to make purchases, and the cycle of layoffs and reduced consumer spending accelerated quickly. In the year that followed the great crash, Americans saw their wages drop by a total of $4 billion. Nearly 3 million people lost their jobs. Faced with an uncertain future and lower incomes, consumers, who had driven the prosperity of the 1920s, simply stopped spending.
 * Effects on business **

The crisis that began in the United States soon rippled throughout the industrialized world. The fragile economies of Europe, still recovering from World War I, were thrown backward. American banks that had lent heavily to European businesses and government now called in those loans. In many cases businesses and governments alike simply did not have the money to pay back the loans. moreover, with buying power down in the United States, foreign businesses were less able to export their products here. They responded by laying off workers. Just as in the United States, laying off workers in Europe meant that there was less money in the hands of consumers to buy products. Governments in the United States and in countries around the world moved to protect their own industries by passing high tariffs. A high tariff would make imported goods more expensive than those made at home. Leaders in each country hoped that high tariffs would benefit their local manufacturers. Unfortunately, the high tariff actually did more harm than good to the American and world economies. As you will read, the decline in world trade that took place in the 1930s created misery around the world. It was one of the several factor that contributed to the nation's slide into what came to be called the Great Depression.
 * Effects overseas **

Write either a journal entry in which you describe the stock market crash and how it has affected you and your money **OR** write a letter to a friend in which you urge him or her to be careful about making stock market investments. Use the notes you took to support your position.
 * Wrap Up/Summary**

Make sure you include key terms, like margin call, gross national product, shares, buying on margin, and Black Tuesday.