The Stock Market Crash of 1929, also known as the Great Depression, was the result of many economic factors. The most important being various economic imbalances and structural failings.
It started in the 1920’s where there was a rapid growth in bank credit and loans. At the time, people had been encouraged and motivated by the strength of the US’s economy that they thought very little could go wrong. This led to people borrowing more and more money in order to buy shares having the thought that they would end up making a profit. Firms also began taking out more loans in order to expand. After some time went, many people began to have piles of debt which made them question how much of a one way bet the stock market really was. This change in confidence in the stock market was what ended up causing so many people to quickly sell all their shares in the
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The fact that such a large amount of people began selling their shares all at once is what in turn led to the crash of the market. It was especially bad for a lot of investors who bought shares on the margin and to the banks and other investors who lent money to those buying on the margin. Because buying shares on the margin had lead to many “margin millionaires” that made enormous amounts of profit by buying shares this way and watching their prices go up; this left many investors exposed when prices fell. It lead to these “margin millionaires” being wiped out w for all they had when the market fell.
We can say that one of the main reasons for the Stock Market crash of 1929 can be blamed on peoples over excitement and false hope in the market. A few years before 1929 the Stock Market was like the new gold rush, everyone was trying to get in it and