Causes Of The Stock Market Crash

There are primarily two theories as to why the stock market crashed in 1929, affecting innumerable people in the United States and around the world. One speculation to how the devastating catastrophe transpired is driven by the idea that there was an over-production of goods and services and an underconsumption by the people, creating a plummeting bubble; consumers held on to their money and stopped investing, hoping that the market would stabilize. Another common conjecture is the belief that the Great Depression was provoked simply by normal recession, within the business cycle, and was brought about by poor policy on the behalf of the Federal Reserve. Many believe the crash was frankly unavoidable because of the unprecedented combination

The Great Crash also known as Stock market crash of 1929, happened in 1929 which was one of the biggest and important history of America. During this time in late October the stock market of the country crashed which lead to the beginning of great depression, and it has lasted for 10 years. Many countries got affected due to the great crash, especially all Western industrialized countries. “Black Tuesday (October 29), in which stock prices collapsed completely and 16,410,030 shares were traded on the New York Stock Exchange in a single day.” (“Stock”). After the crash, the country had tried to cope up from the loss, but it still continued to drop. “By 1932 stocks were worth only about 20 percent of their value in the summer of 1929. (“Stock”). Due to this depression, nearly half of the banks failed, businessman faced bankrupts and people have lost their

The stock market crash of 1929, additionally called the Great Crash, was a sharp decrease in U.S. stock exchange values in 1929 that added to the Great Depression of the 1930s. The market accident was a consequence of various economic imbalances and structural failings (Pettinger). In the 1920s, there was a fast development in bank credit and advances. Energized by the quality of the economy, individuals felt the share

“On October 29,1929, Black Tuesday hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors. In the aftermath of Black Tuesday, America and the rest of the industrialized world spiraled downward..” (Stock Market Crash of 1929) The Stock Market Crash was significant because it marked the start of the Great Depression. The Great Depression was the biggest economic downturn in American History. It not only caused millions of people to become jobless, but it also caused thousands to lose their life savings. People started to live in horrible conditions and they even began starving.

In October 27, 1929, the United States stock market crashed and created a ripple effect of unfortunate events. This economic downfall that the U.S. economy faced was one never experienced by American citizens. The crash immediately stunned Wall Street and wiped out millions of investors. As the years passed the Great Depression only worsened. No one knew how to react to this situation and fear began to over run the country.

The Stock Market crash was something nobody expected, it came out of nowhere and striked fear into the american people. Many people started to panic which lead to a lot of poverty and people struggling economically to support their families. It all started on October 29, 1929 which today we know it as “Black Tuesday.”. “On Black Tuesday when the stock market crashed, billions of the people’s and Bank’s dollars were lost as the world went downward” ( Stock Market Crash). This was known to be the largest economic downturn in history. After all of the chaos with the economy the crash of the stock market led to the Great Depression. The Great Depression advanced the overall economic collapse of the U.S which lead to a lot of symptoms.

In October 1929, there was also Black Tuesday, when 16 million shares were traded on the New York Stock Exchange. Exchanges in a single day by investors. This all signaled the beginning of the Great Depression. On October 8th, 1929, the Dow Jones industrial average dropped nearly 13% (Richardson, Federal Reserve history). The 20s saw an unsustainable rate of increase in share values in the years leading up to the crash, which is why it occurred, causing it to get to the point where it is no longer sustainable, which the 1920’s decisions and lifestyle really contributed to the cause of the 1929 stock market crash.

The stock Market crash was caused because the market was overrated, overbought and dominated. The economic conditions were not helping anyone. The Crash was due to the market opening of 11% or less. Financiers and institutions chipped in with proposals over the market price to stop the panic. Even though the losses on that day were smaller compared to the next two days. Yet, this loss was unreal, as the next Monday, commonly now known as Black Monday the losses were dropping 13% without provoking the margin calls. Afterward, the offers disappeared completely and the market fell again, another 12%. From this point on the market completely fell hitting rock bottom causing horrible things to go wrong. This was one of the factors that lead to the great depression.

Firstly I 'll get into how the market crashed, being dubbed Black Thursday. The crash spelled disaster for the financial system. Companies with serious investments featured an abrupt shock to their assets. This was the beginning of the depression. The national income slipped lower each year from 1929-1932, and it did not return until World War II. Unemployment became the most important problem of the depression to the people living in the US. Another major problem was that the agricultural prices were cut almost in half, and many farms foreclosed because of it. There are many different theories as to why the stock market crashed that day. One was that the attempts of the US government and the Federal Reserve Board to stop speculation caused an overreaction in the market, leading to the selling panic.

In Frontline’s The Meltdown, the causes of the stock market crash of 2008 came into discussion. The topics regarding Bear Stearns, the Lehman Brothers’ and their collapse, and the huge bailout made in results to the market crash. There were great points being made on the mistakes Henry Paulson and Ben Bernanke did not view from their perspective, which in turns were the problems that made up the crash.

The market crash in 1929, because of the increased demand for buying stock and for a way for people to become rich. The stock market, in general, is a risky investment (Rosenberg, n.d.). The investors never know if the company will do well. All they have to do is hope that they do (Blumenthal, 2002).

In the 1920s the stock market soared, and the more it grew, the more people wanted to invest and put money into it. Many of the people bought on margin, which meant that the people only paid a part of a stocks worth when they would buy it and the rest when they sold it (about.com). The United States stock market crashed because of the over production, which meant America industry was truing out more good than people could pay (Ross ). The stock market crashed quickly spread from New York to virtually all sectors of the United States economy. In eevery state, there were shops, manufacturers, farms, and other enterprises, which were both small and large, went into bankruptcy by the undreds. This caused the employes to be laid off, and the amount of employment into a much greater amount (Ross 7, 8). But this all was created because of Black Thursday which started and marked the beginning of this greatest economic crisis

economy, people began buying stocks on the margin. They would borrow most of the stock’s price from a stockbroker and only pay a little bit of the price. If the stock prices kept rising, this system would work well, but if the prices fell, people could not pay the loan back. Near the end of the 1929 year, prices were too high, so people wanted to sell their stocks. They thought the prices would lower soon. Stock prices did go lower and people were not buying. They all wanted to sell their stocks. Prices went even lower on October 29, where 16 million stocks were sold. This caused the collapse of the market.

The crash of the stock market had occurred because consumers were not spending near enough on products. So the products are becoming unuseful and they are just collecting dust. As consumers were not spending, the stock prices kept jumping up which then caused the bubble to burst and crash. On October 24, 1929 is when 12.9 million shares were traded and this is known as black Thursday. Five days later on Black Tuesday another 16 million shares were sold. During that time if you had purchase stock on margin you would receive anything. After the crash, people were having to live off what little income they had and start paying purchases by check and card. The Great Depression ended up spreading to other countries beside the United States.

Just about everyone has a reason for why the Stock Market Crashed in 1929. Aside from the views of the average person, Investopedia interviewed several economists who said that, “the market was overbought, overvalued and excessively bullish, rising even as economic conditions were not supporting the advance” (Pettinger 2). In order to completely understand what that means, it needs to be broken down and people have to watch what occurred pre-Stock Market Crash.