Stock Market Crash causes The Great Depression The stock market crash, one of the most miserable times in the history of the United States stock market. Well, the stock market had many investors who lost most of their money either by the banks or the stock market. The stock market crash caused the Great Depression by making investors and companies lose majority of their money. The Great Depression was the worst unprofitable 10 years in history. This worst time period lasted from 1929 to 1939 and it began after the stock market crashed in 1929.
President Hoover stated, “…the crisis has been isolated to the stock market itself.” (Docs Hoover). The market crash proved this confidence to be wrong. The rich stopped spending on luxury items, and the middle and lower classes stopped using credit in fear of losing their jobs and defaulting on their loans. As a result, industrial production fell by nine percent causing people to lose their jobs and default on loans (Galbraith 42). Industries started to fall apart around the automobile and radio industries.
Besides wiping out the savings of thousands, it hurt commercial banks that had invested heavily in corporate stocks. It also caused a loss of confidence in the market prolonging the depression. The downturn began slowly and almost unnoticeably. After 1927, consumer spending declined and housing construction slowed. Inventories piled up, and in1928 and 1929 manufacturers began to cut back on production and lay off workers.
CLOSING STATEMENT: although, … Businesses were also affected by the Stock Market Crash. Many businesses were already struggling so the crash hurt them even more. “With money scarce, banks and investors were suddenly unwilling or unable to provide industry with the money it needed to gr... ... middle of paper ... ...oblems here in the United States started happening overseas. There was a high tariff put on products that were needed to be exported to other countries which caused more harm to other economies. It is easy to see that the Stock Market Crash was a horrible event for America.
Both the rich and poor were petrified, and the rich even concealed their money so no one could take it from them. The whole economy was get flustered so people just stopped spending their money unless it was something really important. One of the first things that led into the Great Depression was the stock market crash of 1929. Stocks are shares of a company that a person can buy. In the 1920s, the stock
If this did happen investment might fall, parts of the stock market might not be able to pay back debts, and even worse recession might result (Galbraith 118). The Federal Reserve in 1928 tried to make borrowing money for stock speculation more difficult and very costly by raising interest rates. All of the options that the Reserve tried had unfavorable risks associated with them. Many economists believed that the Federal Reserve was responsible for the recession. The stock market did crash on October 29 1929.
The people that were affected the most by the Great Depression were stockholders. Thousands of stockholders lost enormous amounts of money on Black Tuesday. The rapid decrease of stock prices made stockholders lose their money within one day. Even though it was a devastating loss, there was no way to predict it. From 1925 to 1929, the average stock price doubled on the New York Stock exchange, making people invest ludicrous amounts of money in the hope that they would make a hug... ... middle of paper ... ...hange crash of October 1929 and therefore the succeeding depression alerted stockholders to be concerned about their own investments within the stock exchange instead of the data of other people’s investments.
When it crashed, they could not pay back the loans and the banks lost money. The market misled the banks as they thought loaning traders money would be very lucrative. The Federal Reserve was a cause of the 1929 stock market crash because it essentially owned the government and fueled the speculation.
Learning from the Great Depression Over the course of history, America has dealt with its share of economic troubles. One of America’s darkest moments, economically, came in the year of 1929. On October 29th, 1929 America’s stock market crashed. This would become what we now know as the Great Depression. The Great Depression lasted approximately ten years.
The nineteen-twenties is most commonly known because of the Great Depression., But in two thousand-eight, there was also a stock market crash, known as the sub-prime crash, along with the housing market falling a bit itself as well. Bet you did not even hear that, and if you did it probably was not much. Both of these major markets where a result of society’s careless spending habits. The self indulgence of the nineteen-twenties and the great depression affected the Instant gratification of the two thousands so much that it caused a relapse in history causing the stock market crash of two thousand and eight. The stock market is where you buy or sell stocks in a company.