Factors and Effects of the 1929 Stock Market Crash

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It is the Roaring Twenties, and Americans are living on the post-war optimism of World War I; however, this optimism will soon come to a halt due to the most drastic economic crises in American history, the Stock Market Crash of 1929. Not one economic factor led to the stock market crash; it was a number of different factors that all occurred simultaneously. Even today, the country faces stock market crashes, but not near as devastating as the Stock Market Crash of 1929. Although the stock market crash itself only lasted for a few days, its devastating effects lasted for decades.
In the 1920s, the stock market had reached values that were beyond anyone’s speculation. It had reached its peak value in the early days of October of 1929, but those …show more content…

On that date alone, investors lost the equivalent to fourteen billion dollars in today’s currency. In the following weeks, share prices rose; however, prices continued to drop overall. By 1932, shares were only worth twenty percent of their original value before The Stock Market Crash of 1929. Furthermore, half of the country’s banks had failed by 1933. The stock market crash also was responsible for the massive unemployment spike with over fifteen million citizens, or thirty percent of the workforce, unemployed. The Stock Market Crash of 1929 was also one of the leading factors that led to The Great Depression.. Like the stock market crash, The Great Depression was not the result of just one event, it was a combination of many factors that occurred simultaneously. The Great Depression officially began in 1929, when the stock market crashed, and it lasted until 1939. It would take World War II to help stabilize the United States of America’s economy, and lead it out of The Great Depression (History.com Staff). Consequently, the United States implemented new measures to prevent a massive stock market crash from occurring in the future. In 1934, the Securities and Exchange Commission was created to better monitor the stock exchange. The commission faced the impossible task of restoring the public’s trust in the stock market. To restore trust, and to prevent future crashes, the Securities and Exchange …show more content…

One recent crash is the 2008 Stock Market Crash. In the fall of 2008, the United States underwent one of the worst stock market crashes since the Stock Market Crash of 1929. This crash led to the destruction of more that sixteen trillion dollars of American households’ net worth from 2007 to 2009. Additionally, it wiped out more that two trillion dollars of Americans’ retirement savings. To further illustrate the 2008 Stock Market Crash, Dow Jones Industrial Average (a price that is based on the average of thirty significant stocks traded on the New York Stock Exchange) fell from its peak of 14,164.43 on October 9, 2007 to a fifty-four percent drop to 6,443.27 by March 6, 2009. The 2008 Stock Market Crash, like the Stock Market Crash of 1929, was caused by over-speculation of particular markets and bad lending practices. In the year 2000, Americans began to buy more into the housing market. Low interest rates and increasing housing value further provoked people to buy homes. Additionally, the relaxed lending standards of banks led to more people taking out loans to pay for homes that they would usually not be able to afford. At the same time, more and more Americans were becoming indebted with the ratio of debt to disposable income nearing doubling from seventy-seven percent in 1990 to 127% by the end of 2007. Americans were getting loans that could not be paid off. As the

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