Stocks 101
A place where people buy and sell stocks, which are shares of ownership in companies.
What is the Stock Market?
During the 1920s, stock prices rose for years, and many Americans invested hoping to get rich quickly. Newspapers, radio, and easy credit made investing seem safe and popular.
Money is spread very unevenly, with a small group holding most of it. In the 1920s, the richest Americans grew much wealthier while most workers and farmers earned little.
What is maldistribution of wealth?
Because most people could not afford all the goods factories produced, businesses cut production and laid off workers.
This president introduced the New Deal in 1933 to help the United States recover from the Great Depression.
Who was Franklin D. Roosevelt (FDR)?
Homeless, traveling workers who moved from place to place looking for jobs. Illegally rode freight trains across the country searching for work.
Who were hobos during the Great Depression, and why did so many Americans become one?
During the Great Depression, many people lost their jobs and homes, so hundreds of thousands, including many teenagers,
Overproduction, easy credit, farm crises, bank failures, maldistribution of wealth, and high tariffs like the Smoot-Hawley Tariff were all contributing factors to what major event?
The Great Depression
Lets people buy a product with a small down payment and pay the rest in monthly payments with interest. In the 1920s, Americans used ______ to buy cars, radios, and appliances. This helped the economy grow, but it also left many families in debt.
What is an installment plan, and how did buying on credit affect Americans in the 1920s?
Buying risky investments, like stocks or land, hoping to sell them quickly for a big profit. In the 1920s, _________ pushed stock prices far higher than the companies were actually worth. When prices began to fall, confidence collapsed and the market crashed.
What is speculation, and how did it contribute to the stock market crash?
A series of programs and reforms created by President Franklin D. Roosevelt in the 1930s to fight the Great Depression. Its goals are known as the “3 Rs”: relief for people in need, recovery of the economy, and reform to prevent another depression.
What was the New Deal, and what were its main goals?
A region of the Great Plains hit by severe drought and huge dust storms in the 1930s.
What was the Dust Bowl?
Years of over-farming had stripped away the grass that held the soil in place. Crops failed, and many farm families lost their land and moved west, especially to California.
FDR proposed adding up to six new justices to the Supreme Court. Critics, including many in his own party, said he was trying to control the Court and upset the balance of power between the branches. Congress rejected the plan.
What is court packing?
What was FDR’s court-packing plan, and why did it fail?
A person who owns shares of stock in a company, making them a part owner. When the stock market crashed in 1929, shares lost much of their value, and many _______ lost their savings
What is a shareholder, or stockholder?
shares lost much of their value, and many shareholders lost their savings especially those who had bought on margin.
When the government spends more money than it collects in taxes in a year, so it must borrow the difference. During the New Deal, the government spent heavily on relief programs and jobs to help Americans survive the Depression, which created large __________
What is a deficit? Why did the government run deficits during the New Deal?
Government-funded projects that benefit the public, such as roads, bridges, dams, schools, and parks. New Deal programs like the Civilian Conservation Corps (CCC) and the Works Progress Administration (WPA) hired millions of unemployed Americans to build them.
What are public works, and how did the New Deal use public works programs to create jobs?
Neighborhoods of shacks built from scrap wood, cardboard, and metal by people who had lost their homes during the Great Depression. They were called “Hoovervilles” because many Americans blamed President Herbert Hoover for not doing enough to help.
What were shantytowns?
The power of the courts to decide whether laws are constitutional, established in Marbury v. Madison (1803). In 1935 and 1936, the Supreme Court used judicial review to strike down New Deal programs such as the National Recovery Administration (NRA) and the Agricultural Adjustment Act (AAA).
What is Judicial Review?
When a stockbroker demands that an investor immediately repay the money borrowed to buy stock. When stock prices fell in October 1929, brokers made these.
What is a margin call?
Investors who could not pay were forced to sell their stocks, which pushed prices down even further.
This happens when many customers rush to withdraw their money at the same time because they fear the bank will fail.
What is a bank run, and why did so many banks fail during the Great Depression?
Banks lend out most of their deposits, so they could not pay everyone back. About 9,000 banks closed between 1930 and 1933, and people lost their savings because deposits were not insured.
A government program that provides income to people who are retired, unemployed, or disabled. The __________ Act of 1935 created old-age pensions, unemployment insurance, and aid for blind people and needy children. It is still one of the most important New Deal programs today.
What is Social Security, and how did the Social Security Act of 1935 help Americans?
Radio speeches in which President Franklin D. Roosevelt explained his plans to the American people in calm, simple language.
What were the fireside chats, and how did FDR use them to restore Americans’ confidence?
The idea, from British economist John Maynard Keynes, that the government should spend money during a depression, even if it creates a deficit, to boost the economy. Government spending puts money in people’s pockets, so they buy more and businesses hire more workers. New Deal spending followed this idea.
What is Keynesian economics, and how did it relate to New Deal spending?
Buying stock by paying only part of the price, sometimes as little as 10%, and borrowing the rest from a stockbroker. It could lead to big profits if prices rose, but if prices fell, investors could lose all of their money and still owe the loan.
What is buying on margin, and why was it so risky?
When many investors rush to sell their stocks at the same time because they fear prices will keep falling. On Black Tuesday, October 29, 1929, more than 16 million shares were sold and stock prices collapsed. The crash wiped out the savings of many Americans.
What is panic selling, and what role did it play in the Stock Market Crash of 1929?
When the government steps in to influence or regulate the economy.
What is economic intervention?
Hoover believed in limited government and “rugged individualism,” hoping businesses, charities, and local governments would lead the recovery. FDR believed the federal government should take strong action, creating programs to provide jobs, regulate banks, and help people directly.
A tax on imported goods. The Smoot-Hawley ______ raised taxes on foreign goods to protect American businesses. Other countries responded with their own ______, so world trade dropped sharply and American farmers and factories lost customers overseas.
What is a tariff, and how did the Smoot-Hawley Tariff make the Great Depression worse?
What is Mr Wings Dogs name?
Who is Tobey