The Causes Of The Stock Market Crash Of 1929

In October of 1929, the Dow Jones Industrial Average fell 25% in four days, this is defined as the Stock Market Crash of 1929. Billions of dollars were lost, countless investors were crushed by the amount of money they lost, and a plethora of people were forced into debt. The Stock Market Crash intensified the Great Depression, which was was a time of economic calamity in America in the 1920’s and 1930’s. The Great Depression was caused by the consolidation of overproduction, false prosperity, unemployment, banking crises, and the stock market crash of 1929.

The overproduction of farm products, due to improved technology, and false prosperity caused deflation, which was a reason for the Great Depression. Deflation is when the overall price

The trend of deflation intensified. The reason that nobody warned America of deflation was due to false prosperity. The 1920’s were called “the Roaring Twenties”, while mainstream culture at this time supported that it was a time better than anytime before then there were many misconceptions with masses of people at this time (Facts). America was very dependent on production and 42% of people were impoverished. Poverty in 1920’s America was defined by making less than a certain amount of money each year, which was determined by the government (BBC). The masses were indifferent to the amount of people impoverished, proving the mindset of false prosperity. The preconceived notions that the U.S. economy would be unimpaired were soon disproved by the Great Depression. People who were impoverished were getting loans, and buying luxury items (Facts). This lifestyle of believing in the false prosperity and not realizing the problems during the 1920’s of America caused people to suffer more. The false prosperity made the stock market crash, and the Great Depression more

to recover from this depression. The unprecedented occurrences which happened in the late 1920’s and 1930’s caused much to change in America: socially, financially, and politically. Many laws and regulations were passed to prevent something similar from happening in the future, such as the Agricultural Adjustment Organization, the Federal Deposit Insurance Corporation, and the National Recovery Administration (Timeline). People who lived during the Great Depression often suffered because of it for the rest of their lives. People were forced to be stingy to survive, and after the depression was over they squandered their money on luxuries and necessities alike. The government also established safety nets for the people such as social security, and food stamps these are still lasting effects of the Great Depression till this