Stock Market Characters

Characters

Bankers (3 people)

Stock Brokers (1 person)

Company Workers (the rest of the class)

Bankers

Banks will hold people’s money, providing them with interest rate of roughly 2%

Bank buys radio company stock with customer money

Bank makes money if stock value increases

If you make money, you can pay customers back plus interest which increases your profit margin

Stock Broker

Lend customers money who can’t afford radio company stock

You can ask for the money back at almost any time (we call this the margin call)

If stock value goes up, you’ll get your loaned money back plus interest

Company Workers…You Have Options

Buy Stoddart Radio stock If the stock value goes up, you can sell it and make

money!

Save money in the bank If the bank is safe and secure, you’ll earn interest on

your money!

Store money under your mattress If the stock value goes up, your boss can pay you more,

which means you’ll save more!

Week 1

Stock price value is $30

Bank is paying 2% on savings in banks

Brokers are asking for 33% down payment on stock sales on margin

Corporate Analysis suggests Stoddard Radio is a booming company

Week 2

Stock price value is $50

Bank is paying 2% on savings in banks

Brokers are asking for 20% down payment on stock sales on margin

Corporate Analysis suggests Stoddard Radio is a booming company

Week 3

Stock price value is $100

Bank is paying 2% on savings in banks

Brokers are asking for 10% down payment on stock sales on margin

Corporate Analysis suggests Stoddard Radio is a booming company

Week 4

Stock price value is $150

Bank is paying 2% on savings in banks

Brokers are asking for 10% down payment on stock sales on margin

Corporate Analysis suggests Stoddard Radio is a booming company

Week 5

Stock price value is $100

Bank is paying 0.1% on savings in banks

Brokers are calling in all margin calls

Stoddard Radio continues to supply the nation with radios

Week 6

Stock price value is $20

Anyone with money in bank should move to back of the room

Brokers are calling in all margin calls

Corporate Analysis: Stoddard Radio has flooded the market of radios! Lay-offs are imminent!

Takeaways

Buying on Margin (Review) Making a small cash down payment to own stock Broker holds on to stock as collateral Payoff as stock prices rose

Bull Market Prolonged period of rising stock prices (period of

weeks 1-4)

Margin Call Broker demands repayment of the loan at once

Takeaways

Speculation Betting the market would continue to climb enabling

them to turn a quick profit off the rising prices

Bank Run Depositors decide to withdraw all their money at one

time because they fear the bank will collapse

Overproduction Making more goods than you can sell…led to many

layoffs in this time period

Why it all matters…

Bull market through 1920s…more people invest Bull market will only last as people continue putting

money in

Speculation prevalent throughout market…market values start to get bid up without reflecting true value of stock as buyers look for quick windfall Fewer new customers, investors panic and sell

holdings, prices start to fall! October 29, 1929 (Black Tuesday): Stock Market loses

between $10 billion and $15 billion…stocks fall by more than one-third

Why it all matters…

Banking problems Banks invested in market to get higher returns…banks

lost Due to losses, banks stop giving out as many loans

and hurting the economy Some banks closed doors—no insurance for customers

so people lost savings BANK RUNS! Nearly 3500 banks (over 10% in nation) closed by

1932

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Assignment: Life in the Depression

Using Chapter 18 Sections 1 and 2, you are tasked with writing a ONE-PAGE overview of how life changed between 1928 and 1932. You may do this from the perspective of one family or society as a whole. You are also required to make reference to at least 5 ideas discussed in class/textbook about life in this time period.

You are expected to include the end of the Roaring 20s, the Stock Market crash, and the impacts it had on life to receive full credit

Think & Share

In groups of 3, you are to share your one-page stories about life during the Great Depression with your classmates. Your job is to compare

and contrast the stories written and think about the common themes. We will then share the common themes as a class to supplement

the notes on the Great Depression.

The New “Normal”

Over ¼ of the American workforce was unemployed

Soup Kitchens & Bread Lines prevalent

Families losing homes (Bailiffs needed to eject some people from the homes) Led to creation of shantytowns of shacks on public lands Nicknamed “Hoovervilles” as most people blamed president

Hobos wandering along railways, walking, or hitchhiking across nation looking for work/homes

The Dust Bowl

Farm Crisis: Post-war surpluses during the 1920s Plows uprooted grasses and soil needed for

agriculture Prices dropped in late 1920s, many stopped

cultivating Drought struck Great Plains…no water, no grass, soil

dries to dust

Winds led to major dust storms with dust settling over crops, roads, and livestock

Many lost their land and moved west to California

Arts and Entertainment

A release from the reality of life…

Many more movies, radio shows, soap operas, writers

Art & Literature

Steinbeck tells stories of poverty and misfortune

Photographers (such as Dorothea Lange and Margaret Bourke-White) depicted the depression on average Americans

Artists (such as Grant Wood) emphasized traditional American values

Hoover Responds to the Depression

October 25, 1929: “Worst effects of crash upon employment will have passed during the next 60 days” Idea: Downplay public fears, avoid

bank runs & layoffs in panic, and urge people to stay calm and rational

Hoover beliefs American Individualism best Socialism reason Europe is

struggling Why do those two ideas matter?

Hoover’s Ideas

Meet with business and industry leaders They agree to not slash wages; lasts less than two

yearsPublic works funding to replace jobs

Worked marginally, but costs lots of government $ Hoover refused to increase spending, raise taxes, or

deficit spendBanking System Reworked

Federal Reserve refuses to increase circulation Reconstruction Finance Corporation (RFC) made

loans to business but could not meet need of economy

Citizen Help?

Hoover strongly against relief programs that gave money directly to families Thought this should be through local governments

and charitable groups Problem: lack of resources

Emergency Relief and Construction Act (1932) $1.5 Billion in Public Works Programs and $300

million loans to states for relief programs 1st time federal government supplied direct relief

funds

Discontent in the Masses

Hunger Marches Many organized by Communists “Feed the Hungry, Tax the Rich”

Farmers protest Post-war problems Destroy crops to decrease the supply

Bonus Marchers (“Bonus Army”) Post-WWI promise to $1,000 bonus to

be paid in 1945 Bill to pay bonus sooner leads to soldier

march on Washington Gets ugly...panicked officer kills

veterans, MacArthur ignores presidential orders, soldiers tear-gassed veterans and destroy homes