The Great Depression Begins Webquest
Stocks
Stocks are shares in ownership of a company. If a company is worth $100 they could sell 100 shares worth $1 or 5 shares worth $20. Your investment goes up or down depending on how well the company does. For example, if a company is worth 1 million dollars they could sell 1,000 shares of stock, each worth $1,000. If the company did well and made money, the value of the company may go up to 1.5 million dollars, therefore each share would increase in value to $1,500. If you had purchase stock at $1,000 it would now be worth an extra $500. If, however, the company went bankrupt and lost all it's money, you would be left with none of that $1,000 you invested.
The Crash
On Thursday, October 24, 1929, an unprecedented wave of sell orders shook the New York Stock Exchange. Stock priced tumbled, falling $2, $5, and even $10 between trades. As prices fell, brokers required investors who had bought stock on margin (credit) to put up money to cover their loans. To raise money, many investors dumped stocks for whatever price they could fetch. During the first three hours of trading, stock values plunged by $11 billion. At noon, a group of prominent bankers met at the offices of J.P. Morgan and Co. to stop the hemorrhaging of stock prices. The bankers' pool agreed to buy stocks well above the market price. At 1:30 p.m., they put their plan into action. Within an hour, U.S. Steel was up $15 a share; AT&T up $22; General Electric up $21; Montgomery Ward up $23.
Even though the market recovered its morning losses, public confidence was badly shaken. Rumors spread that eleven stock speculators had killed themselves and that government troops were surrounding the exchange to protect traders from an angry mob. President Hoover sought to reassure the public by declaring that the "fundamental business of the country...is on a sound and prosperous basis."
Prices held steady on Friday, and then slipped on Saturday. Monday, however, brought fresh disaster. Eastman Kodak plunged $41 a share; AT&T plunged $24; New York Central Railroad plunged $22. The worst was yet to come. It occurred on Black Tuesday, October 29, the day the stock market experienced the greatest crash in its history.
As soon as the stock exchange's gong sounded, a mad rush to sell began. Trading volume soared to an unprecedented 16,410,030 shares and the average price of a share fell 12 percent. Stocks were sold for whatever price they would bring. White Sewing Machine had at one point reached a high of $48 a share. During the crash one purchaser--reportedly a messenger boy--bought stock in the same company for $1 a share.
The bull (strong) market of the late 1920s was over. By 1932, the index of stock prices had fallen from a 1929 high of 210 to a low of 30. Stocks were valued at just 12 percent of what they had been worth in September 1929. Altogether, between September 1929 and June 1932, the nation's stock exchanges lost $179 billion in value.
The great stock market crash of October 1929 brought the economic prosperity of the 1920s to a symbolic end. For the next ten years, the United States was mired in a deep economic depression. By 1933, unemployment had soared to 25 percent, up from just 3.2 percent in 1929. Industrial production declined by 50 percent. In 1929 before the crash, investment in the U.S. economy totaled $16 billion. By 1933, the figure had fallen to $340 million--a decrease of 98 percent.
(source http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3431)
Stocks are shares in ownership of a company. If a company is worth $100 they could sell 100 shares worth $1 or 5 shares worth $20. Your investment goes up or down depending on how well the company does. For example, if a company is worth 1 million dollars they could sell 1,000 shares of stock, each worth $1,000. If the company did well and made money, the value of the company may go up to 1.5 million dollars, therefore each share would increase in value to $1,500. If you had purchase stock at $1,000 it would now be worth an extra $500. If, however, the company went bankrupt and lost all it's money, you would be left with none of that $1,000 you invested.
The Crash
On Thursday, October 24, 1929, an unprecedented wave of sell orders shook the New York Stock Exchange. Stock priced tumbled, falling $2, $5, and even $10 between trades. As prices fell, brokers required investors who had bought stock on margin (credit) to put up money to cover their loans. To raise money, many investors dumped stocks for whatever price they could fetch. During the first three hours of trading, stock values plunged by $11 billion. At noon, a group of prominent bankers met at the offices of J.P. Morgan and Co. to stop the hemorrhaging of stock prices. The bankers' pool agreed to buy stocks well above the market price. At 1:30 p.m., they put their plan into action. Within an hour, U.S. Steel was up $15 a share; AT&T up $22; General Electric up $21; Montgomery Ward up $23.
Even though the market recovered its morning losses, public confidence was badly shaken. Rumors spread that eleven stock speculators had killed themselves and that government troops were surrounding the exchange to protect traders from an angry mob. President Hoover sought to reassure the public by declaring that the "fundamental business of the country...is on a sound and prosperous basis."
Prices held steady on Friday, and then slipped on Saturday. Monday, however, brought fresh disaster. Eastman Kodak plunged $41 a share; AT&T plunged $24; New York Central Railroad plunged $22. The worst was yet to come. It occurred on Black Tuesday, October 29, the day the stock market experienced the greatest crash in its history.
As soon as the stock exchange's gong sounded, a mad rush to sell began. Trading volume soared to an unprecedented 16,410,030 shares and the average price of a share fell 12 percent. Stocks were sold for whatever price they would bring. White Sewing Machine had at one point reached a high of $48 a share. During the crash one purchaser--reportedly a messenger boy--bought stock in the same company for $1 a share.
The bull (strong) market of the late 1920s was over. By 1932, the index of stock prices had fallen from a 1929 high of 210 to a low of 30. Stocks were valued at just 12 percent of what they had been worth in September 1929. Altogether, between September 1929 and June 1932, the nation's stock exchanges lost $179 billion in value.
The great stock market crash of October 1929 brought the economic prosperity of the 1920s to a symbolic end. For the next ten years, the United States was mired in a deep economic depression. By 1933, unemployment had soared to 25 percent, up from just 3.2 percent in 1929. Industrial production declined by 50 percent. In 1929 before the crash, investment in the U.S. economy totaled $16 billion. By 1933, the figure had fallen to $340 million--a decrease of 98 percent.
(source http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3431)
The Depression Hits
Why did the seemingly boundless prosperity of the 1920s end so suddenly? And why, once an economic downturn began, did the Great Depression last so long?Economists have been hard pressed to explain why "prosperity's decade" ended in financial disaster. In 1929, the American economy appeared to be extraordinarily healthy. Employment was high and inflation was virtually non-existent. Industrial production had risen 30 percent between 1919 and 1929, and per capita income had climbed from $520 to $681. The United States accounted for nearly half of the world's industrial output. Still, the seeds of the Depression were already present in the "boom" years of the 1920s.
Why did the seemingly boundless prosperity of the 1920s end so suddenly? And why, once an economic downturn began, did the Great Depression last so long?Economists have been hard pressed to explain why "prosperity's decade" ended in financial disaster. In 1929, the American economy appeared to be extraordinarily healthy. Employment was high and inflation was virtually non-existent. Industrial production had risen 30 percent between 1919 and 1929, and per capita income had climbed from $520 to $681. The United States accounted for nearly half of the world's industrial output. Still, the seeds of the Depression were already present in the "boom" years of the 1920s.
Follow this link to a web describing the causes and effects of the Great Depression. Use this to answer the questions on your worksheet.
https://www.examtime.com/en-US/p/1683939-Causes-of-the-Depression-mind_maps |
If you have headphones, watch this video to answer the questions on your worksheet (click to view on Youtube if you want to watch full screen). You can pause, rewind, and rewatch sections if necessary. Video questions go in order with the video. If you can't watch the video, read the information at this link and answer the questions on your worksheet.
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Link here for text version.
Text questions do NOT go in order with the worksheet. |
Try the following activity. This type of question is what will appear on the AIR test you will be taking in May as an end of course exam.
15. http://en.educaplay.com/en/learningresources/1666320/depression_timeline.htm 16. http://en.educaplay.com/en/learningresources/1666627/depression_intro.htm |