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The economic cause of the 1929 stock market crash
What caused the stock market crash of 1929
The economic cause of the 1929 stock market crash
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On October 24, 1929, also known as ‘Black Thursday’, one of the greatest economic and social crisis in the United States of America begun. On that day more than 12 and half million shares of stock were sold, which was triple the usual amount. Next, over the following 4 days, the stock market prices fell 23 percent. Afterwards, the Americans had to face suffering and obstacles for the next 10 years. In 1933, the unemployment had risen from 3 percent to 25 percent of nation’s workforce and those who were able to keep their jobs faced harsh reductions in wages.
“The trading floor of the New York Stock Exchange just after the crash of 1929”. In a single day, sixteen million shares were traded--a record--and thirty billion dollars vanished into thin air. (Cary Nelson). This ultimately led to the
The timing of these failures, the bank’s lack of dealing with them effectively, and the brevity of the Stock Market Crash caused the economy to suffer
During the 1930’s, America faced the worst depression in the nation’s history due to a number of factors. America just emerged from the 1920’s, which saw tremendous amounts of economic activity, although many Americans had poor spending habits and lacked the necessary economic knowledge to avoid losing their money. A common practice at the time was to take out loans from banks and invest the money into the stock market. This led to a sharp rise in the prices of many stocks due to the increased interest in investing in the stock market. The stock market eventually faced a crash in 1929 and many scared investors quickly sold their stocks which drove prices down greatly.
Presidents, Herbert Hoover and Franklin Roosevelt , endured their tenure during one of the toughest times in American history, the Great Depression. To lessen the effects of the depression both presidents tried a plethora of different tactics and plans. Through doing such each president was given a label that we today are familiar with, liberal or conservative. During such times one approach was often seen as useless whereas the other was giving the public hope and joy.
The Great Depression and Great Recession have been known to be the greatest economic crises in the United States. The Great Depression (1929-1939) was a period of drastic economic decline, resulting in the failure of almost half the nation’s banks and the unemployment of several tens of millions of Americans. On the other hand, the Great Recession (2007-2009) was an economic decline, impacting financial markets and resulting in the loss of jobs and homes for millions of Americans. Although the magnitude of the Great Depression was greater by far, comparisons can be made between them. This can allow one to not only enhance their understanding of these catastrophic periods but also the extent to which they were similar.
How did the booming economy of the 1920’s affect the standard of living of the laboring man and create a new consumer economy? While the Gilded Age proved to be a challenging time for the laboring man by requiring whole families including small children to work long hours for little pay, the 1920’s was a prosperous time for Americans. Not only did wages increase, but a booming economy meant innovation that led to more products being available for consumers. Now that workers were being treated as shoppers, they acquired a purchasing power that heightened the booming American economy. This new found consumerism was steadily increased by new and wide sweeping advertising and the mass distribution of goods through chain stores.
Harding’s term, he establishes a “return to normalcy,” with the laissez faire system of letting businesses control themselves. This policy led to overproduction in agriculture and over speculation on stocks. One of the most commonly events that is associated with the start of the Great Depression was the Stock Market Crash of 1929. In John Kenneth Galbraith’s book, He hypothesizes that the crash of such powerful market was largely a result of over speculation and the common American Dream belief that purchasing a stock would automatically bring good results. Galbraith writes, “The tickers also fell nearly two hours behind the market; Radio dripped 23 points, and New York paper began its accounts of the day’s events, ‘Wall Street’s Bull Market collapsed yesterday with a detonation heard around the world.’
In the 1920’s, Americans wanted to expand their wealth and prosper. However, that took a turn for the worse when Herbert Hoover was elected president in 1929. At first, the stock market initially reacted favorably due to investors putting in money they did NOT have, they were using credit to purchase stocks while also taking advantage of the low interest rates. Unfortunately, everything went off course when the stock market crashed in October 1929. The market fell by more than half of what it used to.
The Great Depression was a major turning point for the United States’s economy because it changed the relationship between the government and the economy. Before the Great Depression, the economy was a Laissez-faire style market where the government had no influence on private party transactions and businesses. After the Stock Market Crash of 1929, the people of the United States sought for reliefs from the government. The Government responded by creating tax reforms, benefiting the stock market, wheat prices, employment, and the number of bank suspensions, and providing comfort for the people. As a result of their disparity, the people put their trust in the government in hopes that they would repair the broken economy.
The stock market crash of 1929 was needed as like a jump start for the nation. With the stock market crash of 1929, it sent the U.S. into the greatest depression it has ever known and people didn 't know what to do or how to fix it. Fitzgerald couldn 't predict the stock market crash but in his book the Great Gatsby, he does write about how, “that society was living in excess and without curbing its appetite somewhat, ruin was just around the corner.” Before the crash the only people that benefited were the wealthy and officials and the high ups, before the crash the market rose by 108 percent and wages grew, but this all came to a big grinding halt when the stock market crashed. The Nation went up and came crumbling down, this destroyed the economy and the view of people as they did not know how to fix it or change it.
In 1929, the U.S. was hit with the worst economic crisis in the history of the country, the Great Depression. The Great Depression left millions of people unemployed and cost millions their life's savings. The Depression lasted for ten long years for the American people. Since the Great Depression ended, people have studied it, trying to figure out what happened that started it all. The problem was, in fact, the poor economic habits of the people at the time, such as speculation, income maldistribution, and overproduction.
The devastating stock market crash of 1929 brought about the widespread panic that revealed significant flaws in the 1920s economy, setting the stage for a series of events that would lead the United States into a Great Depression. During the 1920s, business owners failed to provide adequate wages to their workers, which led to the consumer not being able to keep up with the production demands. America’s agriculture also suffered a devastating blow because of the plummeting price of crops and livestock. As debt began to spread across the nation, the government created tariffs hindering international trade, as their way of dealing with the economic collapse. As a result, other countries created tariffs of their own, preventing American’s from
There began to be a gradual decline in prices and the stock market ruptured. On October 24, 1929, the infamous “Black Thursday” took place, where stock holders went on a panic selling spree. Things then went from bad to worse, stock prices went down 33 percent. People stopped purchasing goods and business investments decreased after the crash. In the fall of 1930, the first of four major waves
The conflict that brought the run on the bank alive was simply scared people taking money out of their bank. Specifically that when the stock market crashed everybody was scared that their money was going to be lost. Therefore people came and got all their money out of their banks. Banks nationally was completely out of money which made people go into a state of economical depression which as you might have guessed it’s called great depression. The stock market crash as previously mentioned caused most of the bank run.
