The Great Depression Begins Webquest Modified
Background Information: Stocks
Stocks are shares in ownership of a company. If a company is worth $100, they could sell 100 shares of stock worth $1 *or* 5 shares of stock worth $20. Your investment (the money you put into the company to buy shares) increases↑ or decreases↓ in value depending on how well the company does. So if a company is worth 1 million dollars, they could sell 1,000 shares of stock, each worth $1,000. If the company does well and makes money, the value of the company may go up to 1.5 million dollars, and this would mean each share would increase in value to $1,500. If you had purchased stock at $1,000, it would now be worth $1,500 and you would make $500. However, if the company went bankrupt and lost all of its money, you would also lose all of the money you had invested in (put into) that company. You would lose your $1,000. 👋 💸
The Stock Market Crash of 1929
During the 1920s, people wanted to make easy money and the stock market was booming. People borrowed money to invest and thought they would not lose it. However, the stocks began to drop in price and on Thursday, October 24, 1929, everyone lost confidence and wanted to sell their shares of stock all at the same time. Because there were no buyers, the prices of the shares went down. The price of each share of stock went down each time it was traded. As prices fell, brokers (the people who help the investors buy and sell stocks) required investors who had bought stock on margin (investors had taken out a loan in order to buy stock) to pay real money to pay their loans back. To raise some money, many investors sold stocks for whatever price they could get. During the first three hours of trading, stock values fell by $11 billion.
At noon, a group of prominent (important) bankers met together at the offices of J.P. Morgan and Co. to stop the hemorrhaging (loss of large amounts of money). This group of bankers agreed to buy stocks at a price well above the actual (and falling) 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, people lost confidence in the stock market and were afraid of losing their money and/or being unable to pay their loans. Rumors spread that 11 stock speculators (gamblers) had killed themselves and that government troops were surrounding the New York Stock Exchange to protect traders from an angry mob (group of people). President Hoover tried to calm and reassure the public by declaring that the "fundamental business of the country...is on a sound (steady, safe,strong) and prosperous (successful) basis."
Prices held steady on that Friday, slipped on Saturday, and fell to a disaster on Monday. Eastman Kodak plunged↓ $41 a share; AT&T plunged↓ $24; New York Central Railroad plunged↓ $22. The lowest point came on Black Tuesday, October 29th. On this day, the stock market experienced the greatest crash in its history.
As soon as the stock exchange opened, there was a mad rush to sell. Trading volume soared to an unprecedented (never before) 16,410,030 shares and the average price of a share fell 12 percent (every dollar that was in the stock market was now only worth 88 cents). People sold stocks for whatever price they could get. White Sewing Machine Company had reached a high of $48 a share. During the crash, one purchaser--reportedly a messenger boy--bought stock in White Sewing Machine Company for $1 per share.
The bull (strong and profitable) market of the late 1920s was over. Stocks were worth just 12 percent of what they had been worth in September 1929. (So, investors had to sell their $1.00 stock for just 12 cents.) 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 ended the economic prosperity (success) of the 1920s. For the next ten years, the United States was in a deep economic depression. By 1933, unemployment had soared to 25 percent (25 out of every 100 people in our country did not have a job). In early 1929, only 3 out of every 100 people in our country did not have a job (the unemployment rate was 3.2%). Industrial production declined by 50 percent. Before the crash in 1929, investments in the U.S. economy totaled $16 billion. By 1933, it fell 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 of stock worth $1 *or* 5 shares of stock worth $20. Your investment (the money you put into the company to buy shares) increases↑ or decreases↓ in value depending on how well the company does. So if a company is worth 1 million dollars, they could sell 1,000 shares of stock, each worth $1,000. If the company does well and makes money, the value of the company may go up to 1.5 million dollars, and this would mean each share would increase in value to $1,500. If you had purchased stock at $1,000, it would now be worth $1,500 and you would make $500. However, if the company went bankrupt and lost all of its money, you would also lose all of the money you had invested in (put into) that company. You would lose your $1,000. 👋 💸
The Stock Market Crash of 1929
During the 1920s, people wanted to make easy money and the stock market was booming. People borrowed money to invest and thought they would not lose it. However, the stocks began to drop in price and on Thursday, October 24, 1929, everyone lost confidence and wanted to sell their shares of stock all at the same time. Because there were no buyers, the prices of the shares went down. The price of each share of stock went down each time it was traded. As prices fell, brokers (the people who help the investors buy and sell stocks) required investors who had bought stock on margin (investors had taken out a loan in order to buy stock) to pay real money to pay their loans back. To raise some money, many investors sold stocks for whatever price they could get. During the first three hours of trading, stock values fell by $11 billion.
At noon, a group of prominent (important) bankers met together at the offices of J.P. Morgan and Co. to stop the hemorrhaging (loss of large amounts of money). This group of bankers agreed to buy stocks at a price well above the actual (and falling) 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, people lost confidence in the stock market and were afraid of losing their money and/or being unable to pay their loans. Rumors spread that 11 stock speculators (gamblers) had killed themselves and that government troops were surrounding the New York Stock Exchange to protect traders from an angry mob (group of people). President Hoover tried to calm and reassure the public by declaring that the "fundamental business of the country...is on a sound (steady, safe,strong) and prosperous (successful) basis."
Prices held steady on that Friday, slipped on Saturday, and fell to a disaster on Monday. Eastman Kodak plunged↓ $41 a share; AT&T plunged↓ $24; New York Central Railroad plunged↓ $22. The lowest point came on Black Tuesday, October 29th. On this day, the stock market experienced the greatest crash in its history.
As soon as the stock exchange opened, there was a mad rush to sell. Trading volume soared to an unprecedented (never before) 16,410,030 shares and the average price of a share fell 12 percent (every dollar that was in the stock market was now only worth 88 cents). People sold stocks for whatever price they could get. White Sewing Machine Company had reached a high of $48 a share. During the crash, one purchaser--reportedly a messenger boy--bought stock in White Sewing Machine Company for $1 per share.
The bull (strong and profitable) market of the late 1920s was over. Stocks were worth just 12 percent of what they had been worth in September 1929. (So, investors had to sell their $1.00 stock for just 12 cents.) 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 ended the economic prosperity (success) of the 1920s. For the next ten years, the United States was in a deep economic depression. By 1933, unemployment had soared to 25 percent (25 out of every 100 people in our country did not have a job). In early 1929, only 3 out of every 100 people in our country did not have a job (the unemployment rate was 3.2%). Industrial production declined by 50 percent. Before the crash in 1929, investments in the U.S. economy totaled $16 billion. By 1933, it fell 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 what seemed like endless prosperity (success) of the 1920s stop so suddenly? Once an economic downturn ↓ began, why did the Great Depression last so long? It has been difficult for economists 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 almost non-existent. Industrial production rose 30 percent between 1919 and 1929, and per capita income (income per person) 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 what seemed like endless prosperity (success) of the 1920s stop so suddenly? Once an economic downturn ↓ began, why did the Great Depression last so long? It has been difficult for economists 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 almost non-existent. Industrial production rose 30 percent between 1919 and 1929, and per capita income (income per person) 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 |