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The Great Depression United States History Chapter 14 4 Causes of the Great Depression 1. Poor economic policies details 2. Widespread dependence on credit details 3. Uneven distribution of wealth details 4. Poor world economy details Buying on Margin Say you have saved Regular On Margin $100 to invest Buy 10 shares Buy 100 shares @ $10/share - @ $10/share - $100 – 10 shares @ $100 $100/$900 debt $10/share Buy it on margin and it Sell 10 shares Sell 100 shares becomes: @ $20/share - @ $20/share - • 100 shares @ $200 $2000 $10/share - $1,000 value, debt - $900 Profit of $100 Pay $900 debt, profit of $1,000 Greed --- Capitalism! If you did NOT buy on margin you now see friends with greater profit – you want that kind of money, encourages you to BoM! If you DID BoM, you now have $1,000 to spend which =s $10,000 worth of stock! The more you risk – the more you make! …Or ??? The Crash – October, 1929 Black Thursday, October 24, 1929 Investors, for a variety of reasons began to dump stocks, prices plummeted. Big names loudly, publicly buy stocks to give America a boost of confidence in the market…lasts short time Black Tuesday, October 29, 1929 Massive sell-off, people saw prices stabilize so they dumped, 16 million shares traded in one day! Market was decimated, the Great Depression begins 1. What does the cartoonist suggest will happen to individuals because of the crash? 2. How does the cartoonist convey the sense of fear and shock? 3. What do the looks on people’s faces indicate about the impact of the crash?
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