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.
The stock market crash began on, October 24, 1929 the so called Black Thursday. The stock market opened at 305.85, falling 11% during the day. It regained, to close just 2% down for the day. On Black Monday, October 28, the market fell another 13%, even though the bankers had feverishly bought stocks to prop it up. The next day was Black Tuesday, when the market fell another 11%, as panicked investors stampeded out of the stock market.( http://useconomy.about.com/od/glossary/g/Stock-Market-Crash-of-1929.htm)
In the 1920s, there was an increase in bank credit and loans. Confident in the potency of the U.S. economy, the stock market became a one way bet. Many consumers borrowed money to buy shares. Firms took out more loans for expansion. Because people took on so much debt, it meant they became more vulnerable to a change in confidence. When that change came in the form of a crash 1929, those who had borrowed exposed and rush to sell shares trying to redeem their debts.
Interconnected to buying shares on credit was the practice of buying shares on the margin. To buy on the margin meant you paid be...
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...ance Corporation or the FDIC. This ensures that each and every individual bank account is insured up to $100000.
After the crash of 1929 there was a gradual but slow improvement in the market as mentioned before. But that was just temporary. No one could guess that the year 1932 would bring such a huge crash again. The crash of 1932 was so huge that the crash of 1929 seemed really petty in front of it. There was 50% depreciation even from the lowest point of 1929. The drop was so massive that it just dissolved every bit of profit that the stock market ever had. Analysts said that for the stock market to gain that peak, which it had in September 1929, it would take almost 30 years
During the Depression, unemployment rose to 25%, wages fell 42%, economic growth fell 50%, and world trade plummeted 65%. That 's partly because prices fell 10% a year, thanks to deflation
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