Why Did The Stock Market Crash

During the 1920s or the “Roaring Twenties,” there was monumental social and political changes. The nation’s total wealth more than doubled, so there was lots of money to be spent and that's exacting what the American people did. One opportunity available for spending newly gained wealth was purchasing stocks from Wall Street , the banking district for the NYSE. For a while, buying stocks was something only the rich upper class could participate in but a new method of purchasing shares called “buying on margin” allowed the middle class to buy shares of stocks by borrowing the money from a broker

By the end of the 1920's the Stock Market was flourishing. In 1928 the New York Stock Exchange was trading at about six to seven million shares a day. Many economists warned about the dangers of rising prices. People disregarded this information and speculation increased about the Stock Market being the easy way to make money. People invested their life's savings. Banks too invested large sums of money into the Stock Market.

During the 1920's millions of Americans began investing in stocks for the first time. They heard about how rich people were getting by investing so they all decided to do it. Many new investors entered the stock market using borrowed money. Stock market prices rose steadily as inflated market demand outpaced increases in the capital value of businesses. Investors began to realize that a large imbalance existed between stock prices and the amount of money needed to back them up, and began to sell. On October 29, 1929, great numbers of people tried to sell their stocks all at once. This created chaos in the accounting of stocks and for brokers. The New York Stock Exchange and other exchanges prices dropped so dramatically that this event became known as the crash of 1929. Millions of investors lost their savings in the crash and many were deeply in debt since

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.

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 1920’s was known as the time for the stockholder stock prices, since they soared through the roof and reached new levels and created Millionaires overnight. This time period was marked as a large growth with the stock values being high, in 1925 the value of the New York Stock Exchange was approximately $27 billion dollars, and that figure skyrocketed to about $87 billion in just four years. This meant that each average stockholder had tripled their value of stock they were

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.

At this point in the 1920's, American's believed that this soaring increase in the economy would go on forever. The United States had now become a world super power. People started investing in the stock market believing that

In the 1920s many people felt like they could benefit enormously from the stock market. Not keeping in mind that the stock market was liable to change rapidly and unpredictably. Many people invested majority of their savings. As more people invested, the stock prices began to rise. Through the years the stock prices went up and in time people started realising. As they realised, more people stared to invest. Therefore the boom of the stock market had begun. This changed the way the people saw the stock market and it was no

The 1920’s were so prosperous for most, people began to spend money just for the sake of spending money. They spent money on things they didn’t need, and often they took risks with their money, usually involving stocks, not even thinking anything could go wrong. During this era, stocks seemed like the a foolproof way to gain money, and many times they were. People thought that buying stock was such a sure way to earn money. They began buying more than they could afford and borrowing money for the payments, known as buying stock on margin. This is a very risky method of earning money, because you were risking that if the stock is worth little, you wouldn’t be able to repay your debts. Also, factories were mass producing products, such as the

The U.S. economy was booming in the 1920’s. Stocks prices soared, as they were bought on margin for as little as 10% down. Market speculation is cyclical-that is, if one stock appears profitable, you buy it,

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.

The election of 1928 was between Herbert Hoover and Alfred E. Smith, in which Hoover became the 31st president of United States. He kept optimism of the 1920’s afloat, convincing majority of Americans that the economic health would remain stable. At the time, Dow Jones Industrial Average was the most commonly used barometer of the stock market’s success. With stock prices rising, people rushed to buy as many as they could. However, many fell into the trap of speculation, in which stocks were bought without thinking of the risks. People even began buying on margin, in which people would pay a little pick of the stock price, but then borrow the rest of the money. This not only caused many to go into debt, but caused the stock market to slowly decline.

In the 1920’s the U.S. economy was booming. The value of stocks were rising and being bought. People were buying tons of stocks. They put as little as ten percent in. Then everything started tumbling down and people lost about ten times as much as they put in.

It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.