Module Three - Stock Market Crash

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Listen to "Great Depression New Deal Module Three - The Great Stock Market Crash" on Spreaker. *******
The links below will help you with translating tools between English and Spanish.

1. Audio  of a  words  in both English and Spanish. Will also translate phrases.
2. Google Search - Espana: The word can be typed in English, and the search finds results in Spanish, including images
3. Also Google Arabic is available.

4. Google Translate:Can work in any language necessary

Module 3 - Stock Market Crash

The red line represents (stands for) the value of companies (share of stock).

What does it mean that the red line drops off of the chart and through the floor?

Would that be a good or bad thing? Why?

Black Tuesday 10/29 - The Stock Market Crash

Look at the newspaper headline - What did the panic cause, and what did they mean by wrecked?

This video will let you hear the story of 'The Great Crash" you are about to read about

All of the pressures on banking and business you just learned about in Module Two started to cause BIG problems in early 1929. There was a mini crash (BIG drop in value)  in the STOCK MARKET (where shares of stock are sold - pieces of a company) in March of 1929, but the values quickly went back up. Values of stock kind of bounced up and down all through 1929, until it got to October.  

This is a picture from the 1920s-1930s of the floor of the Stock Exchange where they actually traded stocks.

Think of the word PANIC. That is what happened.  Panic is a word that describes a very strong, fear that spreads from person to person like a sickness.    

He is panicking. See the effect it is having?
Can this reaction spread?

You may have seen a friend acting very goofy in a loud way.  They bounce around the room or the hallway.  This is frenzy.  Panic is far more serious than frenzy. One week in October 1929, there was a true panic, and many rich people became poor people in one single day.  This is what happened.

Here you see people who are still wearing nice clothes outside in the cold (see the jackets and steaming soup). I am guessing they used to be rich, but now they depend on other people for free food

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This video shows an actual breadline, and tells some about the time.

The Previous Thursday - 10/24

On Thursday, October 24, 1929, people saw danger signs in the value of stocks. They were afraid the values would FALL a lot. That means the value of their investments would drop A LOT.  They began to be afraid they would lose a lot of money.

It was kind of like this stack of money that is burning.   It would be gone soon.

In order to try to make it so they did not lose much money many people began to sell. This made the prices drop even more (The more of a stock that is available to buy, the lower the price is pushed.)

It works the same way with other things people buy, like the latest and best phone. If you own one of only ten of them the supply is low, and you could probably ask a buyer for any amount of money, since there aren't many phones they can get. BUT if you owned one, and there were 7 million others for sale, you cannot charge as much, since buyers have other choices to buy from, who might charge less than you.

The demand for stocks dropped because everyone wanted to sell, and few wanted to buy. The supply of stock was BIG.   This made the price fall.

In fact on that day there were 12,894,650 shares sold.  That is 4 TIMES more than had ever been sold before. The previous (click here to SEE previous)one day record of 3,875,910 shares. There was so much excitement that police had to be called in to control the crowds growing in the street outside where the stocks were sold.  

They are in the street panicking that their stock money is gone. What do you think the police officer is saying to them?

In the middle of the day the stocks of some companies had lost almost half (½ or 50% ) of what they were worth (value) .  EXAMPLE: The stock of a store like J.C. Penny’s started the day at $83. By lunch time it had FALLEN to $50 for each share. By the end of the day it had climbed all the way back up to being worth $74 for each share. Most, but not all the way back up. People lost money, but not TOO much. However, all was NOT well.

Not much happened the next day, Friday the 25th, because people were really nervous (click to see what nervous might look like). AND because they THOUGHT banks had saved the day. They were wrong.

                                                  Headline from that morning, October 25th, 1929

Monday- 10/28

On Monday, October 28, 1929 the amount sold was huge again.  It was over 9,250,000 shares sold. Once again people lost a lot of money.  Unlike Thursday, there was no big recovery (rise) in values of stocks. This set the stage (created the chance it would happen)  for the next day, which would go down in history as “Black Tuesday.”

Black Tuesday - October 29th

At the start of trading on Tuesday many people started trying to sell their stocks.  They figured (thought) it was better to sell at a loss now instead of waiting for the value of their stocks to drop even lower.  In fact on this day a new record was set as to the number of stocks sold in one day. It was 16,410,030 shares.  

The problem now was that so many people were trying to sell the stocks that there was no one who wanted to actually buy them.  Think of it, if you have something to sell, and nobody wants to buy it, how much is it worth???  Right, NOTHING.  People now started to panic.

This is a picture from that day with people outside the building where they traded stocks.  They were VERY worried

The banks that had invested the savings money of their customers in the stock market started calling the people who had borrowed that money from them to buy stocks. (They call this a MARGIN CALL. A Margin call is when you have to pay all the loan back immediately.)  They wanted them to pay the loan back RIGHT AWAY. ALL OF IT.   

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People were not expecting to have to pay it all back at once.
Then---What if they did not HAVE the money???

This caused a problem as the people did not have that money to pay back, and there was no way they could get it.  Even if they could sell the stock it was now worth LESS than what they had borrowed.

Chart showing Margin Buying problem

Do you get this? You LOST $8,000 on a $10,000 stock purchase. YOU thought the value would go up, but it went down instead. AND...you are lucky. at least you got $2,000 for the stock. BUT...You still owed the back $7,000!!!

Not good!!!

All the money those people did have was invested in stocks, and now that was ALL gone. Many stocks were now worth NOTHING!!!  When people found their hard earned savings was gone, the panic spread.  

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Short video of the Great Crash

Hear about it in another way

The Stock Market had CRASHED. As bad as the “Black Tuesday” crash was, it would get worse. Much worse. By the time it stopped crashing and started a slow climb back up, 3 years later in 1932, it had lost 89 % of the value it had in July of 1929.  

It went like this. On the day of the Great Crash it (average value of stocks) dropped from about $388 to about $201. That is a drop of 48% (almost half).  Six months later (April of 1930) it had gotten all the way back up to a $312 average.  

Then it started dropping again, largely because the money supply in the country was drying up. This supply was necessary to make buying and selling of everything happen. When it stopped dropping in July of 1932 it was all the way down to $42.

This means that from the Great Crash in 1929, when the average value of a stock was $388 per share until the time it stopped dropping in 1932 at about $42 per share, the stock market average had lost $346 in value which added up to 89% of its value.  Kind of like you having 100 dollars, and it starts to just disappear. When it stops disappearing you only have $11 left.

Think of it like this: You buy a (cell phone, video game, whatever) from your friend for $100 because you think it will increase in value, and you can soon sell it to someone for a LOT more money.

However, it starts dropping in value.  Oh, it shoots up a bit soon after it started dropping, but then starts dropping in value again.  When it finally stops dropping in value it is worth only $11.  So it dropped all the way from $100 of value to $11 of value.  

People were going to suffer

Now that was WAAAAY back in 1929.
What should we do when we see people with problems today?
No---Not give them cash. What else???

Module Four - Impact on People of The Great Depression

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Listen to "Great Depression New Deal Module Four - Impact of Great Depression on People" on Spreaker. *******
These links below will help you with translating tools between English and Spanish.

(1) Audio  of a  words  in both English and Spanish. Will also translate phrases; (2) Google Search - Espana; (3) Also Google Arabic is available; (4) Google Translate; ******************************

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Impact of the Great Depression on PEOPLE

These children were living in that shack with their parents.

What was it made out of?

Why were they there?

What questions would you have asked them?

Impact of Great Depression - Introduction

An impact is when something has a strong effect on someone or something else.

Something was said that had an impact on these people. It was different for each one, but it impacted each one.

After the Great Crash people were poor, poor, poor. Many were so poor they would go around begging for some help. Any help. When you ask someone if you can spare something, you are asking them to give it to you. For FREE.

This is a video of a song and images of the time.  The song is 'Brother, Can You Spare a Dime?"

Think.

Why was the guy asking people if they could spare a dime???

Folks were down, way down, as in how much money that had. Also in how they felt in their mood, you know, depressed. People made music about the times to help people get their feelings out. There was an African American man named “Barbecue Bob.”

Barbecue Bob

He was a very famous blues (type of music about sad things) guitar player from Georgia. One of his songs that shows what people were experiencing and feeling was called…

“We Sure Got Hard Times Now”

Impact #1 - Banks Failed

When a bank or business fails that means it goes out of business. It is no longer operating. No longer making money.

These people wanted to get into this bank, but it was closed. Out of business. What do YOU think the sign may have said, besides "Closed?"

Banks lost a lot of the money belonging to their customers when the Stock Market crashed. The money that had been loaned out to people to buy stocks on the Stock Market was just gone.  

When people first heard that this was happening to their bank they would RUSH (hurry) over to it.  They called this a BANK RUN, as people were rushing to the bank to get the money that belonged to them before it was gone.  

Run on the bank.  This bank was closed. what did it sound like when this picture as taken? Can you imagine a conversation between some of the people in this picture?

Bank Run - Movie Version

This shows what a Bank Run might have looked like.

How do the people react to the sound of sirens?

Unfortunately, in too many cases,  there was no money left for them to get.  This made MANY banks close their doors and go out of business.  

See how the $ symbol, which represents the banking system, is breaking apart and falling down.

How does that match what happened during The Great Depression?

In 6 years (1929-1934) 9,815 banks closed in The United States (that is 40% of ALL banks that existed in 1929).  Along with them they took over 9,000,000 savings accounts, and AAAALLLLL of the money in them.  

Think of it, you were a hard working farmer (like the people below), or factory worker, and had been saving up to get a new washing machine to make the work around the house easier. No longer would you have to wash all the clothes by hand. Now, all that money you were saving in the bank was gone, and it was not even your fault.  You see, you could lose money even if you had not invested money in the Stock Market.  How do you now feel?

How would YOU feel if you were this hard working farm family and all of the money you had saved in the bank was GONE because OTHER people were greedy and messed up???

Impact #2 - Businesses Failed and Closed

Businesses had it bad during the Great Depression. Why??? Because most people had no money to buy anything!!!

If a company cannot sell the products they make, they cannot pay for their raw materials (needed to make their products), their cost of getting those raw materials to the factory and the finished products to the stores, their fuel in the factory costs, and most importantly their workers.

These are all of the raw materials needed to make steel. See how a steel factory must be able to pay for many things in order to make steel?

If you cannot pay for these things, you will go out of business. Between 1929 and 1932 85,000 businesses closed down. That is an average of 21,250 EACH year.  Think of how many people no longer had jobs so they could earn money and go out and buy things.  

Impact #3 - Workers Lost Jobs

Unemployment During The Great Depression

All of the people working for those companies that went out of business lost their jobs. Many other people working for companies that DID NOT go out of business  STILL lost their jobs because there was not as much buying and selling going on.  After they lost their jobs they could no longer afford to pay their bills.

They had no money:

* No money for food

* No Money to pay for heat in their  houses

* No money to pay to stay in their house. (When you go to this image think about why all of her stuff is outside on the sidewalk.)

Everyone did not lose their jobs all at once. The problems and pain connected with lost jobs spread over a long period of years. At the start of 1929 unemployment was only at about 4%. That means 4% of the people who wanted to work could not (Example: If 100 people wanted to work, then 4 would NOT be able to find jobs).

After the Great Stock Market Crash in October of 1929  unemployment started climbing (going up)  as more and more companies closed down.

This graph shows unemployment started climbing in 1929, got to the worst in 1933, went down until 1937, went up a bit, and then dropped again in 1939.

Unemployment got to the highest  level in 1933 at 25% ( Example: If 100 people wanted to work, then 25 would NOT be able to find jobs).  This means one-fourth of all people were out of work at this time.

If 1/4 were out of work, which color in the graph represents them?

People would stand in long lines trying to get any work they could. Sometimes they would even push and shove to try to get a job. Why do you think they acted like that?   

People standing in line to try to get a job. There was NO guarantee it would work.

Sometimes these lines would even be segregated, as in only one race.

See how most, if not ALL people in this line were African Americans?

Some men and boys would travel around the country by hopping on trains, illegally, to look for work. They were called Hobos (el vagabundo).  

Hobos hopping on train

Communities would put up signs telling these jobless men (Hobos) to keep going, as their town had enough unemployed of their own to help.  

Often these people, mostly men and boys, moving around would leave small signs telling other hobos coded messages about what that place was like.

Hobo Code Signs (Click here to see another set of signs)

Unemployment started to slowly improve (get better), getting to about 14% in 1937, but then shot back up to about 19% in 1938.  Things were slowly getting better, but the chance to get a job was still not good. All of this unemployment added to the suffering people were experiencing.

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The story of hobos, some of it is people who actually lived through it talking.

Impact #4 - Large Numbers Of People Were Hungry and Homeless

Hungry

We have all been hungry at times, but the type of hunger many people experienced during this time was much greater. They were hungry because they often could not get food.

These people are hungry and living in a tent.

Do you "see" hunger on their faces?

They could not get food because they had no money. They had no money because they had no job. They had no job because their factory had gone out of business.  You see, there were connections between what happened and what it caused.  

There were people who helped the hungry.  They started places called:

SOUP KITCHENS

and BREAD LINES

Hungry people could come and get food for free.  Sometimes even children would be sent to get the free food

What do you think they will get in their buckets?

Look at the faces of the men in this Soup Kitchen video. What were they thinking?

One unfortunate thing was that even in giving out free food there was segregation by race.  

Why do you think this lines had ONLY African Americans in it?

(Remember Jim Crow segregation?)

What About Hunger Today???

This is a bread line from today.  What do you notice?

How is it similar to The Great Depression time???

What should we all do when we can?

Click on THIS link. It tells a story from today. Listen to it. Then think...How can YOU learn today so you can help kids in the future that will have these same problems?

Homeless

People also ended up homeless, and living on the streets because they had no money to pay for their places to live.

Homeless men sleeping on the street during The Great Depression

When they could no longer pay their rent, they would be evicted (put out of the house they had been living in).

Why is their furniture on the sidewalk in the rain?
They had money at one time. What happened?

Often the only choice they had was to find what scraps they could and build little shacks in which they could live.

They built these shacks next to a factory.
Why did they build them there?

Sometimes they would join with other homeless folks and build up neighborhoods of little shacks called Hoovervilles.

See how they even, kind of, have streets?

They did this because they had no place else to go.  No matter the weather, they lived there.

Central Park - New York City

Winter time

The reason they called them “HOOVERVILLES” was Hoover  was the name of the U.S. President at the time, and many felt he was not doing enough to make things get better.

Click on the video below to see more