The Great Depression

~1929-1939 POST WW I~• All nations will

suffer economic hardships

• The economic collapse began here in NYC; Wall Street

• October 29, 1929… Tuesday

MANY LOST THEIR HOMES

The Roaring 20’s in the U.S.A.• The new concept of “credit”

–buying things without money (early form of credit cards)

• Americans were buying:– New Kitchen Appliances &

Clothes – New Cars– And investing in the Stock

Market… to make more $$$ • Fun times reigned

– Many are working – Parties are had everywhere…

times are good!– The Great Gatsby (famous

book)

FLAPPER

Why was this bad?• Credit system

–People didn’t really have the money they were spending on new items

• WWI–The U.S. was a major credit loaner to France, England and many Euro. Nations

AND FINALLY, THE CRASH OF FINANCIAL MARKETS

THE STOCK MARKET CRASHES!CAUSING WORLD WIDE $$$ CRISIS!

What are Stocks? And the Stock Market?

Stocks: A stock is a portion of the ownership of a company. A share in a company gives the owner of the stock a stake in the company and its profits or losses.

Stock Market: The place where stocks are bought and sold… (think Wall Street!)

Let’s Invest in NIKE shoesWe purchase ONE stock on March 2, 2009How much does this cost? $39.76 for one stock

And we decide to sell it on March 30, 2009What is the value of NIKE stock on 3-30-

09?$46.26 for the same stock…

How much $$$ did we make? $6.50!!!

What if we had 10,000 shares?• Let’s say we bought a 10,000 shares on

March 2, 2009…- if it cost $39.76 than we paid $39,760

So now how much $$$ did we make on March 30, 2009…- if the price is $46.26 X 10,000 shares

= $46,260 - $39,760 $6,500 profit in one month

Why did the Stock Market Fail• People bought stocks

on margins—what speculator do– If a stock is $100 you can pay $10 now and the rest later when the stock rose

• Stocks fall– Now the person has less than $100 and no money to pay back

Stock Market Boom and Bust

0

5

10

15

20

25

30

35

Jan-21 Jan-23 Jan-25 Jan-27 Jan-29 Jan-31 Jan-33 Jan-35 Jan-37 Jan-39

Sept. 1929

July 1932

S&P Composite IndexA boom is a time when stock holders make money;

A bust is when stock holders loose money!

Sept. 1929

July 1932

RED LINE IS FOR

PRESENT DAY: US!!

BLACK LINE IS FOR GREAT DEPRESSION

And then…

• With people panicking about their money investors tried to sell their stocks– This leads to a huge

decline in stocks– Stocks were worthless

now• People who bought on

“margins” now could not pay

• Investors were average people that were now broke

• Farmers were already feeling the effects– Prices of crops went down– Many farms foreclosed

• People could not afford luxuries– Factories shut down– Businesses went out

• Banks could not pay out money• People could not pay their taxes

– Schools shut down due to lack of funds

• Many families became homeless and had to live in shanties

Many waited in unemployment lines hoping for a job.

People in cities would wait in line for bread to bring to their family.

Some families were forced to relocate because they had no

money.

MANY FAMILIES HAD VERY LITTLE

LINES FOR FREE SOUPNYC, 1930

COVER OF TIME MAGAZINE

OCTOBER, 2008

DOES THIS PICTURELOOK FAMILIAR?

K-BAIN

• MAY 2, 2009

• Brooklyn Food Conference

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