1929年股灾 stock market crash

It’sCausesandEffectsByJeanineBrotherstonDr.Volpert:MathematicsofFinanceSomeBasicBackgroundontheStocksandtheEconomicMarketWhatareSecurities?•Securitiescanbeeitherstocksorbondswhicharesoldandboughtonthestockmarket.WhatistheNewYorkStockExchange?•World’slargestmarketplaceforsecurities•Currentlymembershiplimitedto1,366members.•SeatobtainedbypurchasingfromexistingmemberInterestingFact:HowdidStockExchangebegin?•TheExchangeevolvedfromagroupofmenwhousedtomeetunderabuttonwoodtreeonwhatisnowWallStreetin1792todiscusssecuritiesTheGreatBullMarket•GreatAmericanstockexchangeboomof1928-1929•Hugebubblewheretherewerehighspeculations•PeoplemademanyinvestmentstomakebigmoneyBullMarketsparkedby?•GrowthinAmericanindustries•Technologicalprogress•Increaseinproductivity•Riseinnationalincomefrom33,200millionto79,200millionfrom1914to1925•Expectationforgreatfutureandun-boundlessoptimismforthemarketWhatSparkedThisGrowthinIndustry?•TheElectrificationoftheproductionprocess–Thisexpandedtheabilitytotransformrawmaterialsintofinishedproducts–Ex.FordMotorsHOWEVER??????•Wagesdidnotraiseeventhoughtheproductiondidandpricesofproductsfailedtodecrease.•Therewasnotanexcessdemandforlabor–LeavingunemploymentratesteadyStockExchangeAverageRiseinSharePrices1924-1928050100150200250StockExchange24-May24-Dec25-Dec26-Dec27-DecPoliticalPromisesSparkMarketSpeculation•HerbertHooverwasthemostpromisingcandidateforpresidentbecauseofhisideaswhichpromisedincreasedeconomicgrowthinAmerica.Hoover’sPlan•ProposedaTariffbillwhichSenatorSmootpresentedcalledtheSmoot-HawleyTariff–Promisedincreasedtariffsonimports–PlannedtoallowmoreproductivityforUSmanufacturers–HelpeaseunemploymentInvestorsmarvelatThisProposal•Investorsbelievedprofitsfromstockswouldincreaseifthetariffbillwaspassed•Sparkedintensespeculation•DowJonesIndustrialAverageincreasedbyalmost35%becauseexpectedelectionofHooverandhisbillThisBubblewasboundtoBurst!TheCrashof1929•“AmericaneconomicdisasterthatprecipitatedtheGreatDepressionwhichwasapproximatelya10yeareconomicslumpaffectingallthewesternindustrializedcountries.”–EncyclopediaBritannicaGeneralCausesoftheCrash•Rampantoverspeculationinmarket•Peopleholdingcompaniesandinvestmenttrusts(whichbynaturecreatesdebt)•BurstingofBullMarketeconomicbubbleinAugust1929•LargebankloanscouldnotbeliquidatedDirectCauseofCrashofStockMarket•AfterHooverselectioncertainpeoplebegantodoubtifthetariffbillwouldhelptheUSEconomy–Farmers,America’stradingpartners,Democrats,andsomeRepublican’sopposedthepassageofnewtariffs.–OnOctober21,1929Senateannouncesplanstolimittariffrevisions–October22,1929morelimitssetontariffbillInvestorsRealizeTariffBillisDOOMED!!!!!!!!!!!!!PANIC!PANIC!PANIC!BlackThursday•OnOctober18,1929pricesbegantofall•PanicstuckoutonOctober24“BLACKTHURSDAY”aftertheannouncementsfromtheSenate•Recordof12,894,650sharesweretradedBlackThursday(Continued)•Majorbanksandinvestmentcompaniesboughtupgreatblocksofstockstostopthepanicbut….THEREATTEMPTSFAILED!!!!!!!!!BlackMondayandTuesday•ThePaniccontinuedand16,000,000sharesweretraded•Pricesonthestockmarketcollapsedcompletely!!!!Hoover’sPlantocombatCrash•Extractedpromisesfrommanufacturerstomaintainproduction.•Signedlegislationprovidinggenerousadditionalfundstopubicworks•Smoot-HawleyTariff1930(finallypassed):toraiseduties50%•ALLTHESEFAILEDTOEASECRISISANDDEPRESSIONFOLLOWED!!!!CausesofGreatDepression•Agriculturehadcrashedin1919andwasacontinuingsourceofweakness.•Banksover-extended•Wageshadnotkeptupwithprofits•In1920’sconsumerswerereachinglimitsofabilitytoborrowandspendCause’sofDepression(continued)•ProductionwasdecliningandunemploymentincreasingEVENbeforethecrash!•Destroyedconfidenceintheeconomy•DownsizingofindustrycausingunemploymentTheGreatDepression•Thestockpricesinthenextthreeyearscontinuedtofall•By1932priceshaddroppedtoonlyabout20%ofthereoriginalvalueEffectsofDepressiononIndividual•Thousandsofindividualinvestorsruined•Lossofsavings•Povertyandpanic•Lessspendinganddemand•Unemployment•WagesdecreaseDeclineinProductionDOWNWARDSPIRAL-littleoutputmeanslessjobs-Manufacturingoutputfallento54%ofits1929output-25-30%ofworkforceunemployed-12-15MillionjoblessEffectsofDepressiononEconomy•Stockpricesdrop•Industrydeclines•Valueofassetsdecline•11,000of25,000banksfail•Becauseoftariffsinternationaltrademarketdecreases•CausesaworldwidedepressionWorldWideDepression•America’sintimaterelationshipwithEuropecausesseriouseconomictroublesoverseasandcontributestoaworldwidedepressionReasonsAmerica’sDepressionEffectsWorld•WorldWarIleftEuropewithlargewardebts–AmericawasamajorfinancerandcreditorofpostwarEurope.OnceUSslumpedAmericaninvestmentstoEuropedriedup–GermanyhurtbecauseoflargewarreparationsReasons(continued)•Nationsattempttoprotectdomesticproductionwithtariffsandhavingquotasonimports–ThisonlyreducedinternationaltradeanddamagedmarketevenmoreHopeShattered•In1930thereisaslightriseinproductionanditseemsdepressionmighteasehowever:Spring1931theweakeningofwesternEuropeaneconomycausesthemajorbankinViennatocrashandGermanydefaultsonitswarreparationpaymentsHoover’slastAttempts•Hooverpropo