Stock Market Simulation and Essential Questions for American Society

1. Stock Market Simulation of the 1920s The Roaring 20 s Economy.

2. Essential Questions Activity Focus: How did the stock market affect the economy? Unit Focus: What influences do economic excesses have on American society? Unit Focus: Did America move closer to or further away from its founding ideals during the interwar period? Unit Focus: What is the proper role of the government in peoples lives?

3. Ms. Douglass Homework Stock Market Simulation Closure Questions are due on WEDNESDAY!!!

4. Can you make money on the stock market using historical information? Can you make money on the stock market using historical information? GOAL GOAL

5. Your bankroll 4- $100 dollar bills 1 $50 dollar bill 5- $10 dollar bills 1 paper clip

6. Directions 1. Read the stock prospectus & decide on your initial investments. 2. Buy stock from the stock brokers. 3. Read the outcomes that are posted for the class. 4. Keep tabs of your money on your worksheet. 5. Continue to buy or sell stock to improve your financial situation. 6. When the final round is complete, you must sell your stock back to determine your earnings.

8. 1920 Outcomes Kroger - purchases a West Coast food chain. Radio Corporation- new model released with built-in antenna. Mammoth Oil- 9 wells begin producing in Wyoming Field. Gotham Bank- Bank declares a 6% dividend. Durant Motors- fails to make payment on notes to Gotham Bank. Midland Utilities- Midland extends services into Michigan and Wisconsin. Kansas Pacific- K&P will pay no dividends this year because of expansion into the Southwest. Tel-Tone- Dial telephones will be installed in parts of New York City.

9. 1920 Stock Outcome Company Name Stock Price Per Share 1920 Kroger $12 Radio Corporation $13 Mammoth Oil $14 Gotham Bank $11 Durant Motors $7 Midland Utilities $13 Kansas Pacific $9 Tel-Tone $15

10. 1922 Outcomes Kroger - Merger with large Eastern chain of stores. Radio Corporation- 15 patents are purchased from Edison s company. Mammoth Oil- Largest oil field in America may be located under Mammoth Oil Lease in Tea Pot Dome, Wyoming. Gotham Bank- Stock price remains the same. Durant Motors- Locomobile sales are depressed because of competition from Ford Motor Company. Midland Utilities- Insull s financial manipulation allows Midland to take control of Commonwealth Edison. Kansas Pacific- Profits rise as agricultural shipments from the Southwest begin. Tel-Tone- New York Stock Exchange announces that Tel- Tone has shown the greatest increase in any stock listed on the exchange.

11. 1922 Stock Outcome Company Name 1920 Stock Price Per Share 1922 Kroger $12 $15 Radio Corporation $13 $14 Mammoth Oil $14 $19 Gotham Bank $11 $11 Durant Motors $7 $5 Midland Utilities $13 $19 Kansas Pacific $9 $10 Tel-Tone $15 $22

12. Special Bulletin President Harding is suffering from a coronary seizure and may have pneumonia. He is reported to be dying. The stock market will close in 5 minutes for new postings.

13. Harding is Dead!

14. Harding Dies Stock Outcome Company Name 1920 1922 Harding Dies-Stock Price Per Share Kroger $12 $15 $13 Radio Corporation $13 $14 $13 Mammoth Oil $14 $19 $16 Gotham Bank $11 $11 $10 Durant Motors $7 $5 $4 Midland Utilities $13 $19 $19 Kansas Pacific $9 $10 $9 Tel-Tone $15 $22 $19

15. 1925 Outcomes Kroger - Corn blight on Kroger farms causes 90% loss of crop. Radio Corporation- speculation on new patent causes rise in stock prices. Mammoth Oil- Japanese offer to buy the total production of Elk Hills. Gotham Bank- French government announces that they will begin to pay their World War I war debts to U.S. Banks. Durant Motors- The Du Pont family begins to buy large blocks of Durant Motors stock. Midland Utilities- Insull fears Cyrus Easton of Cleveland may be trying to take over Midland by purchasing large quantities of stock. Kansas Pacific- Speculation on increased profits from holdings in Mexico cause stock price to rise. Tel-Tone- Announces completion of successful merger. Speculation on the Market continues.

16. 1925 Stock Outcome Company Name 1920 1922 Harding Dies 1925 Stock Price Per Share Kroger $12 $15 $13 $12 Radio Corporation $13 $14 $13 $15 Mammoth Oil $14 $19 $16 $21 Gotham Bank $11 $11 $10 $12 Durant Motors $7 $5 $4 $7 Midland Utilities $13 $19 $19 $22 Kansas Pacific $9 $10 $9 $11 Tel-Tone $15 $22 $19 $24

17. 1927 Outcomes Kroger -Speculation that Purity Markets are buying Kroger for an attempted take over. Radio Corporation- Rumored merger with the Edison Company causes stock to rise. Mammoth Oil- Congressional committee begins an investigation of the Mammoth Oil leases. Possible fraud. Gotham Bank- Bank stock remains unchanged. Durant Motors- Louis Chevrolet is hired to design an inexpensive automobile. Midland Utilities- Cyrus Eaton begins dumping large blocks of Midland stock on a depressed market. Kansas Pacific- Drought in the Southwest and depressed farm prices cause profits of K&P to fall. Tel-Tone- Drop of two points caused by J.P. Morgan selling 200,000 shares. Brokers see only temporary setback .

18. 1927 Stock Outcome Company Name 1920 1922 Harding Dies 1925 1927 Stock Price Per Share Kroger $12 $15 $13 $12 $14 Radio Corporation $13 $14 $13 $15 $17 Mammoth Oil $14 $19 $16 $21 $13 Gotham Bank $11 $11 $10 $12 $12 Durant Motors $7 $5 $4 $7 $10 Midland Utilities $13 $19 $19 $22 $18 Kansas Pacific $9 $10 $9 $11 $10 Tel-Tone $15 $22 $19 $24 $22

19. 1928 Outcomes Kroger - Food prices are depressed because of agricultural surpluses. Radio Corporation- Merger with Edison Company falls through when Radio Corporation pays no dividend. Mammoth Oil- Harry Sinclair is called before Congressional committee. Secretary of the Interior Fall is indicted for fraudulent oil leases. Gotham Bank- Announces profits have increased 5% over the last quarter. Durant Motors- Durant Motors and Fisher Body have announced a merger. New corporation will be called General Motors. Midland Utilities- Reports in the Chicago Tribune disclose Insull s Company is a house of Cards ready to crumble. Kansas Pacific- New oil fields in Oklahoma cause a new boom along the Kansas Pacific track Tel-Tone- Fails to rise as predicted. Brokers are unable to explain the downward trend.

20. 1928 Stock Outcome Company Name 1920 1922 Harding Dies 1925 1927 1928 Stock Price Per Share Kroger $12 $15 $13 $12 $14 $13 Radio Corporation $13 $14 $13 $15 $17 $14 Mammoth Oil $14 $19 $16 $21 $13 $7 Gotham Bank $11 $11 $10 $12 $12 $13 Durant Motors $7 $5 $4 $7 $10 $13 Midland Utilities $13 $19 $19 $22 $18 $14 Kansas Pacific $9 $10 $9 $11 $10 $12 Tel-Tone $15 $22 $19 $24 $22 $17

21. Wednesday, October 23, 1929 The market slipped today as the government announced that home construction, an indicator of prosperity, was at an all time low. The Federal Reserve Board also announced that a change in the prime interest rates would take place in the near future, speculation on the stock market is getting out of hand. It is rumored that the House of Morgan intends to sell 12 million shares of common stock at a loss, before interest rates change. The Gotham Bank announced that margin buyers of stock are being notified that they must put up more money to cover today s losses.

22. Thursday, October 24, 1929 Black Thursday Panic hits Wall Street. Twelve million shares are traded in one day on the New York Stock Exchange. Over $700 million is lost by stock holders in one day as the market takes the greatest dive in history.

23. 1929 Black Thursday Stock Outcome Company Name 1920 1922 Harding Dies 1925 1927 1928 Black Thursday Stock Price Kroger $12 $15 $13 $12 $14 $13 $8 Radio Corp. $13 $14 $13 $15 $17 $14 $4 Mammoth Oil $14 $19 $16 $21 $13 $7 $2 Gotham Bank $11 $11 $10 $12 $12 $13 $12 Durant Motors $7 $5 $4 $7 $10 $13 $12 Midland Utilities $13 $19 $19 $22 $18 $14 $3 Kansas Pacific $9 $10 $9 $11 $10 $12 $8 Tel-Tone $15 $22 $19 $24 $22 $17 $6

24. Closure Questions Did you make or lose money on the stock market? How much? Before Black Thursday, which event had the greatest impact on your stocks? Why? List some weaknesses that were apparent in the 1920s economy, after the fact. How did Black Tuesday affect the stock market? Why did it happen?

25. Stock Market Crash

26. Causes: Margin buying Speculation/overvalued stocks State of the economy Psychological (panic selling) Stock Market Crash

27. Black Thursday (Oct 24) - panic selling Black Tuesday (Oct 29) - the day the stock market crashed Stock Market Crash