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Cause Of The 1929 Stock Market Crash

Better Essays
In late October of 1929, the U.S. stock market crashed, setting our nation into the Great Depression. In an attempt to reveal the true catalysts of the event, the book “Causes of the 1929 Stock Market Crash” examines popular beliefs of what really caused the economic tragedy. The nine questionable causes that are discussed in this book are that the stock market was too high in September of 1929 due to “excessive speculation” (Bierman 32), there was a downturn in business activity, the Hatry affair, the Federal Reserve Board’s actions, a message that there was a “war” against speculators, excessive buying on margin and of investment stocks, excessive leverage in terms of debt, a competitively priced utility market segment paired with a setback in the public utility market, and an overreaction by the stock market.

Bierman argues that the overall stock market was not “excessively high” in September of 1929 and he even explains that the business outlook was favorable. Therefore, the crash did not occur because the market was too high. However, at least one section of the market (public utilities) was too high and too levered, and the stage was set for the selling panic by the press and the governmental officials repeatedly speaking of an orgy of speculation.

After disproving common beliefs about the stock market crash, he continues to explain the actual causes.
The next false cause is the Hatry case, which Bierman refers to as a “tragedy”. It involved an “aggressive
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