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The Causes and Effects of the Stock Market Crash of 1929

Before the Stock Market Crash of 1929

  • Prior to the crash many Americans experienced great wealth and excess because of the stock market
  • Inflation was low while at the same time real income and production were both rising
  • Several companies were increasing their dividend payouts

Economical causes

  • Too much industry overproduction - many goods were not being purchased
  • Market value based on borrowed money and over speculation instead of real value

Before the Stock Market Crash of 1929

1920s Booming Economy

  • The 1920's post WWI era was one of tremendous growth, optimism, and prosperity.
  • Americans had returned victorious and optimistic from the First World War.
  • Industries had been greatly expanded to support the war effort, and these helped to establish capital to fuel the growth in the 1920's

Black Thursday

  • October 24th, 1929
  • Stocks fall drastically
  • Brokers panic and make margin calls but no one can pay them
  • On Black Thursday, a record 12.9 million shares were exchanged.

Sources

Aftermath

  • After the Stock Market Crash, people rushed to the banks to salvage their life savings.
  • Unemployment
  • Billions of dollars were lost
  • https://de.wikipedia.org
  • http://www.history.com
  • https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

What is a Stock Market?

The Stock Market was created in 1792 where stocks and bonds were "traded" – meaning bought and sold .

A business shares its assets and earnings with the general public to acquire money.

What is a Stock Market Crash?

The steep fall in the prices of stocks due to widespread financial panic.

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