What Caused The Stock Market Crash

During the 1920s, America’s economy was terrible. The culture of the 1920s played a big role in causing the stock market crash of 1929. According to the The Roaring Twenties Bubble & Stock Market Crash article, it states “The 1920s marked a decade of increasing conveniences that were made available to the middle class. By and large Americans as a whole were weary of war and looking for a way to put the horrors of the last few years behind them. New products made chores around the home easier and resulted in increased leisure time”. This means the once expensive items were now affordable for middle class because of Americans buying things on credit. This method is described as buy now and pay later. But soon, more Americans used this paying

The Great Depression of the 1930’s was caused by many problems. They include overproduction, monetary policy, war debt, tariffs, the stock market crash, and unequal distribution of wealth. These each play a specific and intricate role in bringing the U.S economy to its knees.

During the 1920s Wall Street was representing the decade of expanding economic opportunity for every American. During 1927 some American banks failed due to bad investments and low prices for agricultural products. On Thursday October 1929 American stock market failed and millions of investors are plunged into bankruptcy. Over 12,894,650 shares changed hands, many at fire. About two months after the crash in October, stockholders had lost more than $40 billion dollars. The slump was made worse by the share-buying fever that infected the country in the 1920s. Everyone wanted to make quick fortunes, therefore they bought company shares on margin. Competitive buying of the shares drove share prices high above their actual value. Then, when cautious

The Great Depression was a devastating time for many Americans. From 1929 to 1932, the US experienced an economic downturn that was calamitous to the lives of many people. Millions upon millions of Americans lost everything when the stock market crashed on October 29, 1929. After exiting an era that left people living a life of luxury, the stock market crash came as a surprise. As a result of the stock market crash, many became unemployed and many families were being forced to close their businesses. Although there were many factors that contributed to the cause of the Great Depression, the three main causes were The Stock Market Crash of 1929, high unemployment, a decrease in consumer purchases due to being “stuffed with stuff” during the roaring twenties.

The causes of the Great Depression in the early 20th century is a matter of active debate between economists. Although the popular belief is that the main cause was the crashing Stock Market in 1929 caused the Great Depression, There were other major economic events that contributed just as much as the crash, such as American’s overextension of credit, an unequal distribution of wealth, over production of goods, and a severe drop in business revenue. As these events transpired the state of economic crisis in the US began to skyrocket.

The Stock Market Crash occurred on October 29th, 1929. Wall Street got struck on Black Tuesday when, on the New York Stock Exchange, investors traded 16 million dollars worth of shares in one single day. Billions of dollars were cut, destroying the investments of thousands of investors. After the event of Black Tuesday, America’s industrial world spiraled downwards into the Great Depression. This was the most powerful and extended economic breakdown in the history of the Western Industrial world up till then.

Prior to the Great Depression, America’s economy was prospering. After World War I, the United States’ economy expanded due to factors that include more railroads being developed, automobiles being developed and more international trade happening. The stock market was on the rise greatly improving the wealth of Americans all over. A lot of Americans had put their money into to the stock market as a way to gain money. Much of the money that Americans invested were borrowed money. Because a lot of the money that Americans invested was borrowed money and banks were putting their money in stocks, when the stock market crashed on October 29th, 1929, millions of Americans lost their money. These were some of the factors that led to the time period known as the Great Depression. In response to the Great Depression, Franklin D. Roosevelt created a series of programs and

The eight years between the end of World War I and the beginning of the Great Depression were generally booming ones economically. The economy’s total output increased by 50%. However, during these times there were three visible flaws during this time period. First and foremost, during these years income was dispersed inequally. This is proven through the fact that, despite output per worker rising, wages and prices were secure, which led to increased incomes for the wealthy. Secondly, the United States was no longer the world’s largest debtor, but became the world’s largest creditor. This means that a creditor must import more than what is exported. Where an exporter must export more

Throughout the many years of the Great Depression, the American economy plummeted greatly because of ongoing issues throughout the United States. The American market, and essentially continuously buying, are what keeps an economy in any country moving. The point at issue which allowed the economy to go down consists of three major factors. All three of these aspects took a great amount of citizens down along with all of their profits. Families, businesses, and employees struggled to stay standing during this time period. The American economy suffered this vast plunge because speculation in the stock market, maldistribution of income, and overproduction of goods.

Government policies alone created during the 1920s did not bring about the 1929 economic crash. It is believed that the crash of 1929 was caused by a lack of spending power held by consumers and international debt that was caused by World War I. Additionally, it may have been the lack of government policies that contributed to crash of 1929. The economy of the 1920s shifted from production problems to consumption (613). Consumers did not earn enough to buy goods that were being mass produced.

Similarly, the Great Recession was due to consumer spending cutbacks and a drop in demand for the establishment of new housing. In the two decades previous to 2008, the American growth rate was very high. Their household needs also became very high, which made demand increase. Spending was at a high. However personal income was decreased. The consumers then had to borrow money from the banks. This gave the consumers debt. So, when the house prices rose, banks stopped loaning money to people and the people decreased their spending. This happened because the people were not able to pay the banks back. People also cut back on buying or making new houses, so household demand dropped. Many say that this decrease caused the Great Recession. Housing was one of the main subjects that many believe, caused the Great Recession. “Subprime” mortgage availability and low interest

Uneven distribution of wealth serves as another cause of the Great Depression. America was wealthy in the 1920s, but this wealth did not extend to all segment of the society. The gains made by wealthy Americans in the 1920s far outstripped gained made by the working class. By the time of the stock market crash, the upper one percent of the population controlled over sixty percent of the nation’s savings. On the other hand, over three quarters of American families made less than $3000 a year. Problems that could develop from this situation were obvious. The bottom-line three-quarters of families were too poor to purchase much to help the economics to flourish. Underconsumption, in the long run, was a vicious circle to the economy. People had no money to spend. The income of many firms dwindled. More people were laid off or cut hours and thus further cut their spending. The economics became stagnant.

They kept the dollar proportional to the amount of gold the United State's possessed in its treasury and in the banks. The shift from the gold standard allowed an excess of dollars to be printed, thus causing inflation. Inflation caused the value of the US dollar to diminish and led to an insecure value of the dollar. The insecurities of the US dollar led to the Stock Market Crash in 1929. In addition, American spending greatly contributed to the Stock Market Crash. In the 1920s, Americans developed spending habits related involving an increasing amount of debt. The factory development during WWI shifted to a development of consumer goods in the 1920s. Consumer goods thus encouraged the spending of the American dollar. Many Americans went into debt pursuing the many luxuries of the 1920s. The increased amount of debt brought the stock market to crash in 1929. The shift from the gold standard, inflation rates, and excess consumer spending provoked the Stock Market Crash of 1929.

After the Great War (1914-1919) came the “Roaring Twenties” followed by the Great Depression (1929-1939). After World War I America experienced the greatest economic growth in its history. Its economic expansion was due to how undamaged it was after the war. It became the richest country in the world at that time. The people enjoyed life as it were back then until the US experienced the largest economic downturn in history when the Stock Market crashed on 29th October 1929. It began in the summer months of 1929 when the US economy began experiencing a small recession where consumers began spending less and unsold goods began piling up, thereby slowing down production. While this was happening stock prices continues to rise reaching levels that could not be justified by anticipated potential earnings. This occurred for a few months until October 24th 1929 when the stock market crashed and America faced the Great Depression a few days after on October 29th 1929 . So what were the contributing factors of the Great Depression? These include:

Imagine waking up one morning, only to find out that all your investments and savings are gone. So if your bank that you invested all your money in collapsed, you didn’t get any money back. This is what happened to millions of Americans during the 1930s. This era was called the great depression.