Topic: The Stock Market Crash of 1929
I. Buying on Margin
 | 1928- Stock profits were 25% annually |
| Banks at the same time paid 3% in interest |
| January 1928- A person puts $250 down for $1,000 worth of stock |
| The Stock Broker takes the $250 and “loans” $750 to the stock buyer |
| December 1928- The stock is now worth $1250 |
| The stock buyer repays the $750 loan and pays $50 in commission to the stock broker |
| The profit is $200 for a cash investment of $250. |
II. Black Tuesday signals the start of the Depression
| September 1929- stocks are prospering |
| October 1929- the broker loans are due |
| Between September and October 1929, stock prices had dropped 50% so what was once worth $1000 now has a cash value of $500 |
| The stock buyers do not have enough money to pay back their loans to the stock brokers |
| The stock market crashes |
III. The Vicious Cycle
| Over 4 million Americans had invested in the stock market. They are now broke |
| Because they have no money, American start to purchase less |
| When people purchase less, storekeepers order less |
| When storekeepers order less, factories produce less |
| When factories produce less, they need fewer workers and people are fired |
| When people lose their jobs, they go to the bank and withdraw their money |
| When the banks begin to run out of money, they ask people to repay their loans |
| When people can’t repay their loans, the banks take away their property and try to sell it |
| When no one has money to buy the property, the banks close and people lose theit life savings |
| When everyone is out of money, AMERICA STOPS! |