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Stock market crash of the 20s
Stock market crash of the 20s
Stock market crash of 1929
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Before the stock market crash occurred ironically the economy was at its highest peak. Businesses were popping up left and right, natural resources were in higher demand, a lot more cars were being bought because people were now able to afford them. Everyone was happy and spending their money on whatever they wanted to because they had the money to afford those things. One of the biggest contributions to the economy doing so well was when people would invest into the stock market and get a profit out of it. Many people were beginning to make loans so that could buy more shares (percentage of an industry or markets total sales that are earned by a particular company over a period of time) and sell them to get more money at a more efficient rate. Investing was a big risk because people had the wrong assumption about it. They thought that every investment they made would make them a profit when that clearly wasn’t the case. Lots of times the investment people make could be a complete flop and they would actually lose money instead of making it. But since the economy was boomin’ there we...
The stock market crash of 1929 was one of the main causes of the Great Depression. Before the stock market crash, many people bought on margin, which caused the stock market to become very unbalanced, which led to the crash. Many people had invested heavily in the stock market during the 1920’s. All of these people who invested in the stock market lost all the money they had, since they relied on the stock market so much. The stock market crash also played a more physiological role in causing the Great Depression.
The stock market expanded rapidly during the period of 1921-1929. At this time investors were optimistic about the stock market, so they traded stocks, which caused the stock prices to rise. The stock market boom led to asset prices rising at a fast pace. Which in turn outweighed the true value of the assets. Eventually, since the stock market did not reflect the true value of the stock, this led to a huge bubble followed by a crash. This crash is also known as the Great Depression that led to a severe economic crisis in the United States.
There is no doubt that the stock market crash contributed to the great depression, but how? One way that the Crash contributed to the depression was the loss of money it caused to the average man. It is believed that in the first day of the crash almost a billion dollars were lost, this took a large amount out of the pocket of the common man. Without this money people were unable to purchase consumer goods, which the United States economy was based on. Another way the Crash contributed to the depression was the loss of confidence in the market. When t...
There were many reasons that caused the great depression of 1929. The foremost reason has to be the overvalued stocks, which led to the crashing of the stock market. The stock market crash of 1929 was then most significant market crash in U.S. history. though the crash lasted only four days, it led to a catastrophic sell-off. The Dow Average a loss of 90% of its value between its record high close of 381.2 on September 3, 1929, and its following bottom of 41.22 on July 8, 1932. That was the worst market in terms of percentage loss in modern U.S. history. It would be another 25 years before the Dow was able regain its September 3 high.
Post the era of World War I, of all the countries it was only USA which was in win win situation. Both during and post war times, US economy has seen a boom in their income with massive trade between Europe and Germany. As a result, the 1920’s turned out to be a prosperous decade for Americans and this led to birth of mass investments in stock markets. With increased income after the war, a lot of investors purchased stocks on margins and with US Stock Exchange going manifold from 1921 to 1929, investors earned hefty returns during this time epriod which created a stock market bubble in USA. However, in order to stop increasing prices of Stock, the Federal Reserve raised the interest rate sof loanabel funds which depressed the interest sensitive spending in many industries and as a result a record fall in stocks of these companies were seen and ultimately the stock bubble was finally burst. The fall was so dramatic that stock prices were even below the margins which investors had deposited with their brokers. As a reuslt, not only investor but even the brokerage firms went insolvent. Withing 2 days of 15-16 th October, Dow Jones fell by 33% and the event was referred to Great Crash of 1929. Thus with investors going insolvent, a major shock was seen in American aggregate demand. Consumer Purchase of durable goods and business investment fell sharply after the stock market crash. As a result, businesses experienced stock piling of their inventories and real output fell rapidly in 1929 and throughout 1930 in United States.
The Stock Market Crash of 1929 was the most devastating crash in U.S. history. It started on October 24, 1929 and the downfall ended in July 1932. I always wondered what caused this calamity. Before starting this report, I knew basic idea about the crash. It was a time of decline and huge fortunes were lost. Now I can figure out just why.
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. When they purchased these stocks at this low rate they never made enough money to pay it all back, therefore contributing to the crash of 1929. Also contributing to the crash was the over production of consumer goods. When companies began to mass produce goods they did not not need as many workers so they fired them. Even though there was an abundance of goods mass produced and at a cheap price because of that, so many people now had no jobs so the goods were not being purchased. Even though, from 1920 to 1929, consumerism and overproduction partially caused the Great Depression, the unequal distribution of wealth and income was the most significant catalyst.
The cause of the stock market crash was largely due to over investment. The problem was people who didn't have the resources, investing from credit to buy into the short-lived age of wealth. Many people now are investing data in computers that is irreplaceable. They leave the data there assuming it will be there the next day or whenever they need it. In an age of information this might not be a wise idea. People are buying information on margin. They buy easy interfaces like Turbo Tax and Windows 98 that come to a computer user with almost no skill. The data is invested by these 'Computer Dummies';. It is the assumption that the data will be safe that will hurt computer users worldwide. It will happen sooner or later which is what people in 1929 knew about the stock-market crash.
There have been many issues that caused the stock market to crash. One major effect on the Great Depression was the current state of agriculture. The effect from both the Dust Bowl drought and the Great Depression made it hard on farmers in the early 1900’s; it was hard for farmers to produce crops (“The Ultimate AP US History”). Farmers with small businesses were forced to end their profession because of the new economic climate. As the farmers left the business of agriculture, there was less crop to sell the country (Pettinger). With the drop in prices after the war, it was difficult for farmers to stay current with loan payments (Romer and Pells).
The Stock Market Crash of 2008 occurred on September 29, 2008. On September 16, Federal Reserve announced it was bailing out insurance giant AIG. On Wednesday, September 17, money market funds lost $144 billion dollars. Prices dropped incredibly, oil dropped the most it was very hard to get oil. The Dow Jones The Stock Market Crash was a very bad time for America. The Stock Market crash influenced The Great Depression although it would have happened in later years if the stock market crash never happened. This was the worst crash in History then 79 years there is another stock market crash the 2008 crash which is also bad (Blumenthal).
The stock market crash of 1929 was the primary event that led to the collapse of stability in the nation and ultimately paved the road to the Great Depression. The crash was a wide range of causes that varied throughout the prosperous times of the 1920’s. There were consumers buying on margin, too much faith in businesses and government, and most felt there were large expansions in the stock market. Because of all these positive views that the people of the American society possessed, people hardly looked at the crises in front of them.... ...
] This catastrophic event is caused by the accumulation of a large scale of speculation by not only investors but also banks and institutions in the stock market. Though the unemployment rate was climbing during the 1920s and economy was not looking good, people on Wall Street were not affected by the depressing news. The optimism spread from Wall Street to small investors and they were investing with the money they don’t have, which is investing on margin as high as 90%. When the speculative bubble burst, people lost everything including houses and pensions. The main reason ...
At first, the effects of the crash were felt by people who had invested a great deal of money in stocks which was about four million people out of a population of one hundred and twenty million people. Some investors lost their life savings and everything they had. Then, people who had never even owned one share of stock were affected. Banks loaned large sums of money out to high risk businesses and consumers in order to profit from the interest on the loans. These high-risk businesses and consumers were unable to repay these loans when the stock market crashed. People also ran to the bank to take out their money, which were called bank runs, for fear that the bank would run out of money. Banks failed due to unpaid loans and bank runs. In just a few years after the crash, more tha...
In early 1928 the Dow Jones Average went from a low of 191 early in the year, to a high of 300 in December of 1928 and peaked at 381 in September of 1929. (1929…) It was anticipated that the increases in earnings and dividends would continue. (1929…) The price to earnings ratings rose from 10 to 12 to 20 and higher for the market’s favorite stocks. (1929…) Observers believed that stock market prices in the first 6 months of 1929 were high, while others saw them to be cheap. (1929…) On October 3rd, the Dow Jones Average began to drop, declining through the week of October 14th. (1929…)
Causes of the Wall Street Crash On 24 October 1929, some shareholders began to lose confidence and believing that the prices of shares could not continue to rise. forever, decided to sell it. A panic began, and so many shares were sold. on that day that it became known as Black Thursday. The Wall Street