how the stock market crashed Essay

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Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth, banking problem, industrial power houses and agricultural depression which ultimately lead to the infamous Stock Market Crash of 1929. The “roaring twenties” was an era when our country prospered greatly. The rapid increase in industrialization was fueling growth in the economy, and technology improvements had the leading economists living that the uprise would continue. During this boom period, wages increased along with consumer spending and stock prices began to rise as well. Billions of dollars were invested in the stock market as people began speculation on…show more content…
Modern industry had the capacity to prodded vast quantities of consumer goods, but this created a problem: Prosperity could continue only if demand was made to grow as rapidly as supply(Heibert 74). People had now been looking away from traditional values such as saving, postponing pleasures and purchases, and buying only what they needed (Hicks
99). New advertising methods were used to persuade people to buy new products like automobiles and radios and house hold appliances. The result was rash buying and consumption which kept the economy going through most of the 1920’s. Three quarters of the United States population spent basically all of their yearly incomes to purchase consumer goods like food, clothes, radios, and cars. These were the poor and middle class: families within comes around, or usually less than $2,500 a year (McElvaine 44).
A good question was why were so many people in the United States invested in the stock market during this time. One reason was the rising stock dividends. The stock market was propped up by new investors entering the market , who viewed it as an easy way to get rich quick. However, economic historians estimate that a relatively small number of Americans, about 4 million, had investments in the market at any one time
(Kindlesberger 190). The constant influx of new investors coming in and old investors moving out ensured that new
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