History Test: Stock Market Crash and Great Depression

Stock Market
-Companies sell a portion of their company
-Investors make money off of the company
-A particular market where stocks and bonds are traded; stock exchange.
-A stock exchange is an organized system of buying and selling stocks in corporations and businesses

-notes that show ownership of company. measured in shares
Value at creation:
-set by company
Value in future:
-determined by the market
Benefit for creator:
-raises money at the start, when you first sell the stocks
Negative creator:
-don’t earn money after initial sale
-share the ownership of your company; profits and decisions
Benefit for user/buyer:
-if prices go up, buyer can sell for a profit
-share profits
Negative for user/buyer:
-company can go bankrupt and you lose everything

-note that is worth a certain amount on a certain date
Value at creation:
-determined by the market
Value in future:
-face value of the bond (whatever it says)
Benefit for creator:
-get money now
Negative creator:
-pay more in future
Benefit for user/buyer:
-get more money in the future
Negative for user/buyer:
-company/ government/ organization can go broke

a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves).

Buying on margin
-when someone buys stock with borrowed money

Margin Call
-When a bank asks you to pay back part of all of loan

Bank run
-When people all at once ask for deposits backs

Bank Failures
-when a bank can’t return deposited money

The Great Depression
-the economic crisis and period of low business activity in the U.S. and other countries, roughly beginning with the stock-market crash in October, 1929, and continuing through most of the 1930s.
-⅓ of all banks failed in 1931
-By 1933 the unemployment rate was around 25%
-Average family income dropped 30% in the first few years of the Great Depression
-When the market crashed, many investors lost most of their savings
-Many Americans found themselves out of work
-Almost overnight value of many stocks plunged
-The united states was about to enter the worst domestic crisis since the civil war

The Crash of 1929
-The Stock Market crashed in October of 1929
-Prices of stocks plummeted quickly
How it happened:
-Because many investors lacked the money to continue purchasing stocks, they bought on margin
-But, when the crash came, investors and brokers didn’t have enough money to pay off their loans
-In fear that a crash would come, many investors sold their stocks in late September (after the record prices occurred)
These sales effected the stock prices, and caused prices to fall
-The prices declined very quickly on October 21, and for three straight days stock prices plunged as investors sold of million of their shares each day
-On October 24, also known as Black Thursday, over 13 million shares of stock was sold
-The decline continued the next Monday
-Tuesday, October 29, the decline of stock prices started to worsen
-By the end of the day, 16 million shares of stock had been sold

Problems leading up to the stock market crash
These things occurred in the early 1920’s
-Farm income shrank
-Industries declined
-As a result as both of these, employees cut of wages and laid off workers

Factors that caused the great depression
-Another factor of causing the Great Depression was the large gap between rich people and normal people in America
-During the late 1929’s less than 1 percent of the population owned one third of the country’s wealth
-At the same time, about 75% of americans were in poverty or on the edge of it and getting super close to it

Credit Crisis in the 1920’s
-Borrowed money fueled much of the economy in the 1920’s
-Farmers bought land, equipment, and supplies with of credit
-Consumers used credit to buy cars
-Investors borrowed to buy stocks
-Many small banks suffered when farmers defaulted and failed to meet loan payments

International depression
-Weakness in America’s economy also affected foreign economies
-European countries borrowed money from American banks to sell goods to American consumers in order to repay their World War I debts to the US
-During late 1920’s bank loans dried up
-International trade slowed down because, without -American Loans other countries had less money to spend

Joblessness and Poverty during the Great Depression
-As the Depression continued in the US many American’s lost their jobs
-In 1932 over 25% of Americans were out of work
-Industrial cities were the hardest hits
-Workers that managed to keep their jobs only worked part time or for reduced wages
-Many people would wait for hours just to get a cup of coffee, a slice of bread, etc.
-Many unemployed people would try to make a couple of cents by shining shoes or even selling apples on street corners

Franklin D. Roosevelt
-Because the economy was crashing, the many believed the democrats could win presidency
-In a meeting at Chicago in June 1932, democrats choose —Franklin D. Roosevelt as their didate
-When Franklin found out he had nominated, he flew to —-Chicago and gave an acceptance speech
-As Republicans and Democrats held their conventions in 1932, the Depression continued to get worse
-The republicans nominated Hoover for re-election
-Because poor country, Hoover’s chances of winning the election for very small
-Related to the New Deal

The New Deal
-He sent Congress a stack of proposals for programs to deal with the nation’s economic problems
-Out of all 15 proposals Roosevelt proposed, Congress approved every single one
-The New Deal was anything that FDR did to try to fix the economy
-The hundred days was apart of it

Relief Acts
-Short term solution, Government gives money and support to the people
-Created for a short term problem

Public Works Acts
-For the public, the government supplies jobs

The Hundred Days
-After fixing the bank’s problems, Roosevelt focused on the nation’s economic concerns
-He tried to do as many things to convince Americans they would get out of the economic crisis
-Trying to create an optimistic feeling
-FDR sent in 15 new proposals to congress

Emergency Banking Act Relief
it gave insurance to commercial banks and made investment (in the stock market) and commercial (like wells fargo) separate banks

Glass-Steagall Act and FDIC
FDIC stands for: Federal Deposit Insurance Corporation
Glass-Steagall Act and FDIC
-The Glass-Steagall Act=part of the Banking Act
-reformed banking system
-separated commercial and investment banks
-not around today
-Commercial banking vs. investment banking
-commercial could not invest in stocks
-Investment banks could invest in stocks
-Commercial banks= banks you put your money in
-Investment banks= banks that only invest
-FDIC (Federal Deposit Insurance Company) worked Glass-Steagall
-If bank failed, FDIC paid depositors up to $2,500
-Convinced people to deposit in banks again
-The FDIC only protected commercial banks
-The FDIC is still around today
-allowed people to deposit in banks again, which helped the economy
-people’s money was now safe
-investment banks remained unprotected and could still fail
-Wants permanent; later restrictions could be taken down (and they were)
Did it work?
-Improved the state of the American banking system
-Considered “safety net” for years after because it protected banking system and depositors
-strictest banking law ever created

Agricultural Adjust Act
-Agricultural adjustment administration (1933)
-Was a farm belief
-Paid farmers not the grow certain crops and own less livestock. This also benefitted farmers
-This increased price of food
-slaughtered 6 million pigs
-Meant that farmers got more money to do less work, raising the price of food
-Paid farmers more than working on a large farm would
-Not as many people who were poor and hungry could afford food after slaughtered livestock was handed out
-Meant that farmers could afford to lay off unskilled workers, causing a higher unemployment work
-If you worked for a farmer, you would lose your job because there is not as much work to do on the farm
-Farmers brought in more income and received loans from government
-Cut back on production by 30%
-Raised prices
-good for farmers
-cotton, wheat, corn prices doubled in three years
-bad for the poor people
-1936 declared unconstitutional
-regulating agriculture

Social Security Act
Social Security Act of 1935
-I was a retirement plan called a pension that gave money to the needy, such as the elderly. They made this act to try and help young adults in getting jobs
-Gave money to people over the age of 65
-The Social Security Act is a mix of Reform and Relief
-They got the money by putting tax on workers and employers
Gives relief to the people
Funded the elderly because the government didn’t want them to back to work so younger people coming into the states have jobs
Put tax on employees and employers
Could rely on the government too much
-It worked because it’s still around today. Also when the elderly retired they got money and when new citizens came in looking for jobs. They found them easily because most of the elderly would retire.

WPA stands for: Work Progress Administration
-The WPA Act was created to solve the problem of the high unemployment rate in the United States.
-The WPA Act employed people to construct public places like, roads, schools etc.
-This was a public works act
-Specific Acts in Denver the WPA created: Denver Public Library, Red Rocks, Denver Zoo
-Employed many people and lowered the 25% employment rate.
-Filled cities with public places good for the community.
-Little aiding to the South
Overall, the WPA was a success
-It put 8.5 million people to work (17% of unemployed people of gained jobs)
-Employed both men AND women
-“brightened up” America by filling it with artists and musicians.
-Helped african-american get jobs when other people might not let them

What is capitalism?
-Capitalism is an economic and political system in which a country’s business and industry are controlled by private owners for profit, rather than by the government
-Capitalists believe in the free market.
-Capitalism is taken away with monopolies
-Capitalists believe that private companies and charities, not government, should provide all the needs of the citizens

Free Market
The Free Market is:an economic system in which prices are determined by unrestricted competition between privately owned businesses. The Government stays out of it
-Capitalists believe in the free market. In a free market, prices are set by supply and demand.
What can ruin a free market?
-Government, monopoly, cheating
How do you keep the free market?
-Competition, perhaps the only need for government under capitalism is to keep the free market fair
-In a free market, prices are set by supply and demand.
-Competition is supposed to keep things fair

What is Socialism?
-Socialism is an economic and political system in which a country’s business and industry are regulated and/or owned and controlled by a central government
-Socials believe the free market does not provide for all and therefore should be heavily regulated
-Socialists believe the government should provide essential services to all citizens, such as health care, education, pensions, etc.
-Communism is extreme socialism

-Extreme socialism
-Communism is an economic and political system where all wealth and property is owned by everybody equally
-Karl Marx and Frederick Engels came up with communism in the mid 1800’s
-Communism does NOT believe in religion
-Communism is extreme socialism

Joseph Stalin
-In the late 1920’s Joseph Stalin came to power as a communist leader in the Soviet Union
-Stalin executed his rivals, killed thousands of people that he suspected would be his rivals, and also sent millions of people to Russians Labors Camps
-Leader of the Soviet Union

The Soviet Union
-In the late 1920’s Joseph Stalin came to power as a communist leader in the Soviet Union
-Stalin executed his rivals, killed thousands of people that he suspected would be his rivals, and also sent millions of people to Russians Labors Camps

Reform Act
-Reform law is created to fix a long term problem
-Will fix it in the future when a problem occurs again

What is fascism?
-A form of government based on radical nationalism or patriotism
-Fascists believe the nation is more important than the individual, therefore individual rights are not important
-Fascists governments are dictatorship
-Since fascists believe so strongly in nationalism, they often have racist views and policies
-Fascists believe in religion

Adolf Hitler and the Nazis
-Hitler purpose was to unify all German speaking people, by taking over all of the German Speaking countries
-Adolf Hitler became the leader of Germany and right away he put his strong words into action
-Hitler promised a better life for people
-Once Hitler and his men gained political power and trust from the citizens, the men became dictators
-In 1921, Hitler became the chairman of the National
Socialist Party, also called the Natzi Party
-Hitler and the Natizi’s believed that Germans were superior to all other people
-The Natzi’s took out their anger against the jews, because
-Soon after Hitler became chief-minister, he ended democracy and made Germany a totalitarian

Germany’s expansion plans
-In March of 1936, he ordered troops into Rhineland
Hitlers next victim/hit was Austria
-In March of 1938, he sent his troops into Austria and right away they annexed it
-Next he went to Sudetenland, an area of Czechoslovakia, were many German speaking people germans lived
-Then the Munich Conference happened and Hitler agreed not to take any more land
-March, 1939 Hitler’s army returned to take over all of Czechoslovakia, he broke his promise
-Meanwhile, Hitler was also making plans to invade Poland and take over
-He did not go through with it because Poland bored the Soviet Union, and Hitler worried that Stalin would get mad at him

Totalitarian State
-Totalitarianism is a political system in which the state holds total authority over the society and seeks to control all aspects of public and private life wherever possible.
-ex. Hitler made Germany a totalitarian state

-Hostility to or prejudice against Jews.

-pacify/placate someone by giving into their demands

Munich Conference
-The Munich Conference took place in Munich, Germany in 1938
-At the Munich Conference the Europeans leaders asked Hitler not take any more countries, and in return Hitler could keep Sudetenland. This showed Hitler that the European leaders are weak

“Peace for out time”
-“Peace for our time” was said by the British Prime Minister (Neville Chamberlain)
-What was the significance of “peace for our time?”… Neville Chamberlain was soo wrong
-The peace did not last very long
-If Neville Chamberlain’s statement about peace would have been correct, he would be a hero

Neutrality Acts
-While all of this was going on around the world, Americans wanted to avoid it
-Between 1935 and 1937, Congress signed many Neutrality
– Banned sale of weapons to nation at war. Trade only to nations that could pay for cash goods and transport the goods in their own ships

Soviet-German Non-Agression
-Soviet-Union Non-Aggression pact in August 1939
-The pact allowed Hitler to use force against Poland without the fear of Soviet Intervention
-This Natzi-Soviet pact shocked the rest of Europe
-This was surprising because Hitler and Stalin were enemies

Axis Powers
Japan, Natzi Germany, Italy

Allie powers
UK, USA (not until 1941), France, USSR

Steps to creating communism
-Marx believed that social classes were the cause of all human suffering, you need to get rid of social classes
-Switching to communism Marx believed, could be achieved by following these steps:
-The proletariat (working class) takes over the government
-The government becomes purely socialist
-The government takes all of the wealth from the citizens
-Give back all of the money equally
-The government divides and distributes all wealth and ceases to exist

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