Why Did The Stock Market Crash

Imagine this. You wake up one morning in the year 1929, in your luxurious, pricey mansion. You then make your way downstairs to eat that nice big breakfast. Then you kiss your family good bye and head off to your fancy job. You come home that evening and suddenly you’re flat broke. Meaning all your money and life’s savings vanished. Unreal right? Well it was real for hundreds of families on October 29, 1929. The day the stock market crashed and when America’s confidence was challenged greatly.

The Roaring Twenties is known as an age of parties, jazz, and overspending. After World War I, the optimistic American people reacted by celebrating and overspending. They purchased new appliances such as cars, radios and refrigerators; they purchased luxury items like clothes and invested in stocks. Their new attitude towards the booming American economy was carefree, leading to a series of events. First the stock market crashed. Next, the banks failed. Then, companies laid off employees who were unable to make the payments on the items they purchased. Tariffs and droughts further complicated the situation. This decade became known as the Great Depression, because the economic setbacks impacted everyone and everything. But the question is “Why did Americans lose so much money in such a short period of time?” One answer is, the failing stock market. A second is unregulated banking systems which allowed for buying on margin. Third, the lifestyle following World War I was too materialistic. The Great Depression was caused by Americans failing to responsibly manage their money.

Many people believe the Stock Market crash and the Great Depression are one in the same. In the nineteen twenties the Dow Jones went from sixty to four hundred. People became instant millionaires. Trading became America’s favorite pastime and a quick way to get rich. There were Americans mortgaging their home and investing their life savings in stock such as ford. However, there were many fake companies that formed to deceive the inexperience investors. Many investors did not believe that a crash was possible; they all thought the market would always go up.

The use of credit to buy entertainment created an speculative bubble which finally burst in 1929 with the stock market crash and people “running on banks” desperate to get the money in their savings. This caused over 600 banks to close 6 days before the end of 1929. The banks only had so much money and once the money ran out, it was gone forever. One man, a janitor had $1000 saved up over 40 years and lost it all when he could not get to the bank in time. By 1933 some states had no banks open, 1000s of homes were foreclosed and 34% of americans had no source of income. The innovation of technology caused many people to buy on credit and when the people could not pay it back since all the banks were closed the economy was brought to a

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

As prices would go down farmers produced more to try and make up for it, except that as they produced more prices dropped. Fourth was that the bands were unstable. They would loan out way too much money riskily and have a low amount of reserves since there was little enforcement for these types of bank regulation. The one who was supposed to regulate them was a large business owner himself and he wasn’t to keen on interfering with business. Wo when the economy slowed down and people went back to the banks to get their money there was none to take, forcing the banks to start calling back in loans and foreclosing on people. Even with that banks still didn’t have enough money so they had to close, leaving a lot of people without money. Fifth was overspeculation which included a lot of consumer credit and margin buying. This fits in with the last explanation of what happens when the banks had to start calling in loans, but no one had the money to pay it so many were foreclosed on. Sixth was that there was a sort of overconfidence in the American people. They had this false belief that the economy was going to keep growing so they failed to save enough money to withstand the slowdown. All of these weaknesses in the 1920’s economy led to a greater slowdown of the economy leading into the Great Depression.

During the 1920's, the North American economy was roaring, but this decade would eventually be put to a stop. In October of 1929, the stock market began its steepest decline to this date in history. Many stock market traders and economists believe and pray that it was a one-shot episode never to be repeated. On the other hand, many financial analysts and other economists believe that the current stock markets are in place to repeat the calamitous errors of the 1920's. In this paper, I will analyze the causes of the crash and discuss the possibilities of it re-occurring.

During the 1920’s business was booming, many Americans were using credit cards to buy materials that they knew they could not pay back, businesses were producing products in an efficient manner, the cycle of debt was inevitable and electricity was being used in every American home. However, years later disaster strikes, on October 29 1929 Americas once healthy economy with a 4% unemployment rate suddenly spiraled out of control due to the stock market crash where billions of dollars were lost since many Americans wanted wealth and would go to any measure to achieve it which lead to careless investments and many investors raced to take their money out of the stock market as soon as it crashed. This unstable economy did

After a while, many businesses went bankrupt, leaving business owners with bills that went unpaid. Luckily, after World War I ended, America had become one of the world’s leading creditors. By this time, Americans, with full confidence of being prosperous forever, were increasingly investing in stocks. Unexpectedly, in the days of 29 October 1929 the stock market had crashed. Banks that had invested heavily on stock market and real estate now had lost most of their money. There is only little money left in the country by now; the period of Great Depression had arrived

In the 1920s, American economy had a great time. The vast majority of Americans in 1929 foresaw a continuation of the dizzying economic growth that had taken place in most of the decade. However, the prices of stock crested in early September of 1929. The price of stock fell gradually during most of September and early October. On “Black Tuesday” 29 October 1929, the stock market fell by forty points. After that, a historically great and long economic depression started and lasted until the start of the Second World War. The three causes of the Great Depression are installment buying, uneven distribution of wealth and the irrational behavior in the stock market.

Many Americans went wild investing beyond their needs. They were investing with money they didn’t have. Investors had to pay ten percent of the total value of stocks at the time of buying. The rest they could pay in installments. The stock market could not be stabilized. There were huge amount of money being borrowed out of the stock market. There were huge number of new banks that were cropping up every single day. They didn’t have any rules telling them the amount of reserves that was allowed to be loaned out. They also didn’t have any regulations to determine the minimum capital required to start up a bank. The banks were closing faster than they were opening. The situations became worse when the stock market crashed in 1929. It loss around fourteen billion dollars of wealth. After the crash, the Securities and Exchange Commission (SEC) was set up. The purpose of the SEC was to protect investors from dangerous or illegal financial practices or fraud, by requiring full and accurate financial disclosure by companies offering stocks, bonds, mutual funds, and other securities to the public. After the crash there were temporary improvement in the market. The 1929 stock market crash was like a petty crash that led to a bigger market crash in 1932.

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.

One of the major cause for the economy to fall was the stock market crash of 1929. The American stock market "boom" was built on borrowed money. There was a major wealth gap between America's rich and poor that reached its greater extent in the twentieth century. One percent of Americans held 70 percent of all America's wealth, meaning the other 99 percent of American's had to split up the remaining 30 percent of wealth for all purchases. Eventually, with hardly enough money to go around, the cost of installment plans and home mortgages had skyrocketed. This led to the 99 percent no longer being able to borrow anymore money, meaning they stopped making purchases. Another cause to the economic crisis was that the international economy lacked

When the market crashed people was not able to buy and purchase items like they were this led to the number of items being produced and caused a reduction in the workforce. There for this caused people to loose

The stock market crash was one of the most devastating things that has ever happened.This was one of the most sadest day for our economy.It happend because of the stores trying to sell their stuff for a lot of profit.We see evidence of this in to kill a mocking bird by how the cunning hams were poor.When the cunninghams son didn't have lunch money and scout tried to help.