Stock Market Crash Of 1929

1432 WordsOct 6, 20166 Pages
Stock Market Crash of 1929 The United States was experiencing great optimism and economic growth prior to the stock market crash of 1929. The conclusion of World War I in 1918 ignited this exciting time known as the “Roaring 20’s.” The key economic factors that contributed to this time is that business’ were exporting to Europe (which was still rebuilding from the war), unemployment was low, and automobiles and other goods were spreading across America creating jobs and efficiencies for the economy. During this time of economic growth, the securities market experienced a surge in activity. This was primarily due to investors buying on margin, which is essentially credit, as ratios as high as three to one. This meant that investors were putting down one dollar of capital for every three dollars of stock they purchased. Even though a lot of people during this time made enormous amounts of gains, this still meant that a loss of a third of the value of the sock would wipe them out. This was a huge problem for investors because they were buying stocks in expectation of rising share prices rather than fundamentals. Even with this surge of activity in the securities market, propositions that the federal government should require financial disclosure and prevent fraudulent sale of stock were never seriously followed. The economy stumbled in the months leading up to the stock market crash of 1929 due to excess production in many industries. This created a

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