During the 1920’s the stock market went through a rapid expansion. This expansion caused the stock market to suddenly and rapidly collapse. October 29, the day of the crash, was later known as Black Tuesdays and was the start of the biggest financial crisis in U.S history, which was later known as the Great Depression. This economic depression lasted for a few years and was a devastating time for Americans. Many banks collapsed and because deposits were uninsured, many people lost their all savings. This was only the beginning.
Rewinding time, in 1792, the stock market was invented as a means to buy and sell shares of companies. This later grew very popular than in the 1920s, millions of American had invented their money in stocks. When President Hoover was elected, people had high hopes for the country as well as the economy. Stock prices were extremely high and people kept putting their money into it. However, during late 1929, the markets experienced a drought of investors. This was when the stock market started crashing, and on October 29, it had collapsed, stocks had lost $10 to $15 billion in value in a single day!
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Many banks collapsed due to the crash, and back then, deposit insurance had not yet been created. Thus, people who had money in those banks lost most, if not all of their money. Because people have lost their money, they stopped buying most products they used to buy, which lowered the demand for these products. However, factories have acquired new technology which enabled them to produce more of their products in a shorter time period. Due to the lower demand of products, industries ended up overproducing, and without people buying their products, they lost profit. This loss of profit caused companies to lay off workers and lower wages. Lower wages contributed to further low products demands. This was a cycle which kept furthering the