On October 24, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock. On Tuesday, the stock prices collapsed completely” ("Stock Market Crashes"). Thousands of people were invested in these stocks and they lost millions of dollars because of the crash. The Stock Market Crash triggered a banking crisis, business failures and trouble overseas.
As result of these surplus goods the farmers had to drop food prices to sell it and this meant income was getting lower and lower. The other reason connected to the farmers overproducing was the fact that World War 1 had ended which meant they had to stop selling their produce to European countries as the soldiers had gone back home and would be producing their own goods, because during the First World War the Europe... ... middle of paper ... ...em they did not get back what they had invested therefore they lost a lot of money as the value of the shares was not worth a lot now. So they would sell their shares for less money then they had originally invested in the stock market therefore this created poverty, which led to the Great Depression. The other problem was the banks did not have enough money to help the businesses that were in trouble. This was because they had lent too much money to everybody that they did not have enough left in the banks themselves.
People bought many goods this way and were not able to buy merchandise later on because they were in debt. Businesses did not make profits because people did not buy their goods. This caused many businesses to shut down and also induced the stocks to go down. This initially triggered the start of the Great Depression. The Stock Market crash indicates the drop in the prices of stock.
Workers couldn’t buy goods. Banks made bad loans to people. The banks wanted to expand. But people couldn’t pay for the loans. Before the great depression started, so many people said they couldn’t pay the banks back, which caused the banks to close down.
The stock market caused this depression because of something called “buying on margin.” Buying on margin was a phenomenon that occurred in the Twenties where people would borrow money from brokers to buy stocks. This brought record numbers of people into the market, and created a price bubble. When the bubble popped, the brokers wanted their money back, and people were forced to sell their property and cash in their life savings to pay the brokers back. These people were barely able to make ends meet, and could no longer afford the luxuries of the Twenties. Because so many people had bought on margin, the economy suffered from a severe lack of activity, creating a nationwide depression.
Until October of that year when people realised that the prices had risen too much and were about to fall, so people began a drastic sell. This resulted in the Crash. The immediate consequences of the crash were the massive unemployment. By 1932 there were 13 million people unemployed. Banks lacked the right amount of cash as a reserve and were giving out loans much too easily.
All of the margin buyers would be wiped out quickly. The whole market in 1929 compounded the leverage idea as "investment trust" proliferated. The investment trust existed for the sole purpose of owing stock.... ... middle of paper ... ...lack Tuesday an unprecedented 16.4 million shares changed hands. Stocks fell so much, that at many times during the day no buyers were available at any price (McElvaine 48). This speculation and the resulting stock market crashes acted as a trigger to the already unstable U.S. economy.
October 29th, 1929 marked the beginning of the Great Depression, a depression that forever changed the United States of America. The Stock Market collapse was unavoidable considering the lavish life style of the 1920’s. Some of the ominous signs leading up to the crash was that there was a high unemployment rate, automobile sales were down, and many farms were failing. Consumerism played a key role in the Stock Market Crash of 1929 because Americans speculated on the stocks hoping they would grow in their favor. They would invest in these stocks at a low rate which gave them a false sense of wealth causing them to invest in even more stocks at the same low rate.
There were many elements that led to the Great Depression like the stock market crash, bank runs, the dust bowl, and the new deal. The Great Depression was an economic downturn between 1929-1939. Many people lost their jobs and did not have enough money to keep a roof over their head. Only the rich could manage while the unfortunate grieved. Both the rich and poor were petrified, and the rich even concealed their money so no one could take it from them.
All of their hard earned money was just suddenly taken away as in if they never had any money in the first place. People that suffered from losing their entire savings from the banks eventually began getting frustrated the government. As the market was crowded with inexperienced but feverishly eager investors who lacked capital reserves, the falling prices produced a shock effect... ... middle of paper ... ...e stock market crash of 1929, Black Tuesday. Black Wednesday was used to refer to a day of widespread air traffic snarls in 1954 as well as the day the British government was forced to withdraw a battered pound from the European Exchange Rate Mechanism in 1992. Black Thursday has variously been used for days of devastating brush fires, bombings and athletic defeats, among other unpleasantness.