The Stock Market Crash Essay example

The Stock Market Crash Essay example

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The Stock Market Crash


The nineteen twenties were a time in this countries history of unbelievable prosperity. The stock market was going through the roof, stocks doubling in price, prosperity was everywhere, and America seemed to have the formula for exceptional success. Billions of dollars were invested in the stock market as people began to squander money on the rising stock prices and buying on margin. . The stock market was controlled by professionals that worked for large firms who had good financial backing which made it easier to use the market advantageously. Small investors were never shut out of Wall Street but the professionals paid for stock tips and also rigged the market so that certain stocks would rise and fall. This gave small investors a much harder time in making money through the stock market. As the market began to grow more small investors entered the game and were really just gambling their money.
Those who didn't put their money in the stock market were judged insane or incompetent. However, the same formula that generated all of the profit would eventually be the cause of “Black Thursday”.
Thursday, October 24, 1929 has the unpleasant honor of being called “Black Thursday” because it was on this day that the New York Stock Exchange crashed, indicating the end of the "Roaring Twenties" and the beginning of the Great Depression. On Black Thursday, the stock market nearly totally collapsed as millions of people began withdrawing money in fear of losing it all. The following Monday the stocks dropped once again and on Tuesday a record 16,410,030 shares were sold. Not only did the stock market prices drop drastically but the business world was brought down with it. Inflation also rose because of the...


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...stock exchanges, providing much greater protection for investors. If something like The Stock market crash started again federal bureaus would step in and attempt to prevent it.
However, this is of little importance since many of the causes of the 1929 crash are now illegal. First of all commercial banks are no longer allowed to invest in stocks. Second, the Federal Reserve now has greatly increased power over interest rates. Which gives them much greater head power to prevent a crash. The Exchange Act of 1934 regulated stock market trading. These acts gave investors more piece of mind because they knew more about what they were buying or investing in and it also gave them more protection from fraud. Another factor that makes it less likely for a crash to occur is the elimination of the big investment trusts, except the mutual funds, which are highly regulated.

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