The Stock Crash Essay

Beginning on October 29, 1929, there was a stock market crash in the United States which was a significant turning point because it halted the considerable economic success from the roaring 1920s, leading to a nationwide depression. This event took place during the presidency of Herbert Hoover, and it resulted in a drastic change of the United States’ political, economic, and social structure. This event also spurred the interest of many political figures to try to save the economy including Franklin Delano Roosevelt who issued many reforms for the protection of the people and to restore the vitality of the nation. The Stock Market Crash of 1929 was a major turning point in United States History because it represented the negative impacts of the changes derived from the roaring 20’s, and the events that occurred after this event strongly impacted the structure of society leading up to today.

One of the most prominent aspect of the Great Depression was that the people of United States lost confidence in the banking system and the banking crises of the 1933 followed. Until 1930s, unregulated banking system existed with the notion that increased competition would make the market more efficient increasing the consumer choice base and thus would promote resource allocation and growth. Since people at that time weren’t too supportive of centralization, there was division of power and all the states and regions had their own banks to mobilize resources and carry out investments. This led to increasing competition to attract the same resources which escalated the rates offered to depositors and induced lenders to invest in high return, high risk areas. As a result, the financial system became fragile and there were frequent mortgage

The Stock Market Crash played a major role in bank failures. After the crash, people were indifferent about the stability of banks, so they all began taking out their savings. Banks no longer had the currency to stay open. For those who did not take this

“[It] marked a fundamental break in U.S. history, a drastic change in basic attitudes and institutions that define the roles of citizen and state” (Reynolds 1416). On October 29, 1929, the U.S. Stock Market crashed, or the “the value of stock fell quickly” (Arnesen 36). This occurred after years of massive speculation, which was the purchase of high-risk stocks for a high return. In all actuality, the downward spiral began on October 18, when stocks first declined. The destabilization of the market convinced stockholders to begin pulling out their funds; they also traded stock for a lower amount in value, so shareholders lost the full value of their investments. This “panic” came to fruition on October 24, Black Thursday;

The stock market crash was only the beginning for America. “Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and rising levels of unemployment as failing companies laid off workers” (“The Great Depression”). By 1931, over 6 million Americans were left unemployed (“The Great Depression”). Thousands of banks were shut down by 1933 due to many investors demanding cash deposits and forcing banks to liquidate loans (“The Great Depression”). “Banks, which typically hold only a fraction of deposits as cash reserves, must liquidate loans in order to raise the required cash. This process of hasty liquidation can cause even a previously solvent bank to fail” (“Great Depression”).

On Tuesday, October 24, 1929, the United States stock market experienced the single most catastrophic crash in its history. This date would come to be known as “Black Tuesday”. Before Black Tuesday, America was experiencing one of the single greatest economic eras of prosperity. So much so, that it was known as the “Roaring 20’s”. During this time the amount of American wealth tripled, with mo re money going to the top 10% of people and the bottom 90% being left behind. There were more and more people buying company stock, but there was not enough people selling stock, which led to massive amounts of price inflation. This inflation led to the stagnation of various industries, such as, agricultural and manufacturing. When stockholders realized that the companies that they were investing in were not worth the stock they purchased them for there was a major sell out, which led to the bankruptcy of banking, agricultural, and manufacturing

It is often said that perception outweighs reality and that is often the view of the stock market. News that a certain stock may be on the rise can set off a buying spree, while a tip that one may be on decline might entice people to sell. The fact that no one really knows what is going to happen one way or the other is inconsequential. John Kenneth Galbraith uses the concept of speculation as a major theme in his book The Great Crash 1929. Galbraith’s portrayal of the market before the crash focuses largely on massive speculation of overvalued stocks which were inevitably going to topple and take the wealth of the shareholders down with it. After all, the prices could not continue to go up forever. Widespread speculation was no doubt a

In the crash of nineteen twenty-nine one of the major issues was the banks, people were putting purchases on credit and the bank did not get paid back what they were owed. Banks were down fifty percent (Brennan). The banks being down was one of the biggest causes of the stock market crash of nineteen twenty-nine. In nineteen twenty-nine the stock market caused unemployment to rise and for people. “In recent months, investors anxious to put their own fingers on the pulse of he seemingly

First, by examining how banks operated in the 1920s, one can see how the banks ‘spurred’ the crash. During the 1920s, people were content and the future seemed promising. The horrors of World War 1 were in the past and sons came marching home from the war. Consequently, life began to return to normal, and

The first time the United States struggled financially was in 1929. Some may know this as the dirty thirties, but a majority of us know it as the Great Depression. The Great Depression was caused when the stock market crashed. It crashed because the stock market was not representing reality. The shares were worth much more than what the companies said they were worth. “By 1933, nearly half of America’s banks had failed, and unemployment was approaching 15 million people, or 30 percent of the workforce” (Stock Market Crash of 1929). Another big factor to the stock market crashing was the fact that many people were buy stocks using credit, so when the stock market started to crash many had to sell in order to pay off their debt.

In 2010, the American economy was struggling to bounce back from a devastating collapse in 2007. The housing market had collapsed and economists were baffled. The stock market did not entirely crash, yet the economy still could not be stimulated. For the most part, much of the financial industry was left unregulated, allowing banks to loan money to people trying to buy houses, with no guarantee of the money being returned. With a low interest rate of 1.24 percent, people were looking towards the housing markets as an investment. The low interest rate sparked a demand for both mortgages and housing, expecting the prices of houses to rise. However, in 2004, the rates began to rise. By the end of 2004, the interest rate was 2.25 percent.

The 1930s, the period of the Great Depression is perhaps the most unstable financial time in United States history. The decade where more than 40 percent of nation’s banks disappeared crippled the economy for years and caused the Senate to pass the Glass-Steagall Act (part of the U.S. Banking Act of 1933). The main purpose of the legislation was to separate

Almost 75 years and almost 20 years ago, there were huge crashes in New York. These crashes caused an uproar throughout the nation. Number of people died, billions of dollars lost and damaged lots of lives. Those crashes had been called most severe of the 20th century. Those crashes are symbolized as Black Days. Well, you might think that those crashes could be car crashes or plane crashes or train crashes. You might also think that if nation could have lost billions of dollars and lots of lives, those could be car or plane or train crashes. But as you thought, those were not car or plane or train crashes 75 and 20 years ago. The reasons were different than what you are thinking.

The Great Crash 1929 written by John Kenneth Galbraith is a Non-fiction book about The Great Crash of 1929. In his book, he begins with the events leading up to the crash and how the stock market formed into such a dominant presence within the American economy and ultimately the world economy. He uses people and events to help describe and elucidate his points and opinions about how the great crash came to be a catastrophic event that was inevitable to happen and in no way of really preventing. He then goes into depth of what caused the great crash and how it destroyed the American people and their economy for a whole decade and its many effects of poverty, bankruptcy, corruption, and crime. His next ideas were about how people tried to prevent

The reasons that led to the Wall Street Crash can be put into two main