The Stock Crash It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread. One thing is for certain, no one single reason can be given for the stock market crash. There are however smaller causes and much larger causes which can be attributed to this down period in the economy. Galbraith lists in his book five of the main reasons, or as he puts it, weaknesses, which lead to the disaster. The first one he believes is to blame is the bad distribution of income. In 1929, five percent of the American population held the wealth. This meant that in the that year, this high income bracket received 1/3 of all the personal income. This translates into a lack of American spending, and as Galbraith puts it, " the rich cannot buy great quantities of bread" Most spending was done by the lower classes, even though they made far less money. The second reason Galbraith lists was the bad corporate structure. During this period, the weaknesses could be found in the new holding companies and investment trusts. Trusts such as the one ran by Harrison Williamson and the American Founders Gro... ... middle of paper ... ...ich contributed to the fall was the refusal on October 11, 1929 of the Massachusetts Department of Public Utilities to allow Boston Edison to split its stock four to one and went as far to say that no one would buy the stock anyway. This was a negative blow to the companies in general and to deny them the split was unprecedented. The Crash of 29 was clearly brought on by numerous factors, however, had there been a fundamentally sound economy in place at the time of the crash, the country may have been able to pull through it. This was not the case of course and for the next several years, people in the United States experienced something which not even the Harvard Economic Society could predict ( try as they might) and because of this great event in American history, the people who restrained from jumping off those New York city high rises, were stronger for it.
The stock market crash of 1929 is 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. More businesses became aware of the difficulties, which caused businesses to not expand and start new projects. This caused job insecurity and uncertainty in incomes for employees. The crash was also used as a symbol of the changing times. The crash lead the American peop...
In October 1929, the United States stock market crashed due to panic selling. This crash started a rippling effect that contributed to a world wide economic crisis called the Great Depression. This crash was such a shock because of the economic expansion of the 1920’s when the Dow Jones average reached an all time high of three hundred eighty one. The year 1928 was a time of optimism and the stock market had become a place where everyday people truly believed that they could become rich. People everywhere were talking about the market and newspapers were reporting stories of ordinary people such as chauffeurs, maids, and teachers making millions off the stock market. People who didn’t have the money bought on margin. The stock market was booming and the excitement about the market caused a lot of over speculation. People ignored the small signs of the impending crash until Black Thursday, October 24, 1929. Four days later the stock market fell again.
During the 1920's, the North American economy was roaring, but this decade would eventually be put to a stop. In October of 1929, the stock market began its steepest decline to this date in history. Many stock market traders and economists believe and pray that it was a one-shot episode never to be repeated. On the other hand, many financial analysts and other economists believe that the current stock markets are in place to repeat the calamitous errors of the 1920's. In this paper, I will analyze the causes of the crash and discuss the possibilities of it re-occurring.
The stock market crash of 1929 is 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...
Two months after the stock market crash, stockholders lost more than fourteen million dollars; it dropped more than 40%. It continued to decrease; it went down to nearly 90% from its 1929 highs. Before the crash the 1920s were known for the roaring twenties, parties, extravagant outfits, and the music. It was the decade where people were known to spend money, they were not afraid of spending it. But when banks started to crash that is when people started to panic and was trying to get their money back, millions of Americans lost fortunes. This caused companies to lose their values and no longer be able to afford to stay in business. William C. Durant joined the Rockefeller family and other financial giants to buy big stocks to prove to the people their assurance in the market but they failed to stop decline in prices. According to the website Globalyceum, US gross domestic product, in 1929 $103.6 billion, in 1930 $91.2, in 1931 $76.5, in 1932 $58.7, in 1933 $56.4. The total size of the American economy, restrained by gross local product, suddenly dropped following the crash on Wall Street from $103.6 billion to $66
It has been said that every good thing must arrive at an end. On account of the Roaring Twenties that end came suddenly and startlingly. It is simple for one to think back upon the monetary circumstance that prompt the accident and disparagement the specialists for not seeing the indications of a potential calamity. Be that as it may, it was not all that simple for them to see such an accident coming. The 1920 's were a blasting decade and stock costs appeared to be at an unfaltering move for an apparently interminable ascent. Numerous elements can be ascribed to the reason for the accident however nobody element can be singled out as the lone reason. The real reasons for the share trading system accident of 1929
Klein, Maury. "The Stock Market Crash Of 1929: A Review Article." Business History Review 75.2 (2001): 325. Academic Search Complete. Web. 28 Mar. 2014.
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...
On Tuesday, October 29th, 1929, the crash began. (1929…) Within the first few hours, the price fell so far as to wipe out all gains that had been made the entire previous year. (1929…) This day the Dow Jones Average would close at 230. (1929…) Between October 29th, and November 13 over 30 billion dollars disappeared from the American economy. (1929…) It took nearly 25 years for many of the stocks to recover. (1929…)
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.
There wasn’t just a single action or event that sparked the stock market crash. It was a series of bad judgements and choices made by the consumers, over looked by expenses and the era they had just experienced full of wealth and prosperity. Nobody saw this coming, or could even suspect this of happening. Consumers continuously invested in the stock market, leading to over speculation, poor government policies and and all around an unstable economy. Large investors catching wind of a bad outlook and future in the stock market, pulled their money out of the market and went straight to the banks. Because of the crash and its aftermath which revealed serious flaws in American economy, it led up to the Great Depression. The crash caused over 5,000 banks to close and for the many who invested their money only in banks, it was devastating crisis. Farmers started facing tough times when unemployment rates rose. Nobody had the money to pay for the food leaving farm prices dirt cheap, which meant lower income...
In 1929, A Yale University Economist Irving Fisher stated. " The nation is marching along a permanently high plateau of prosperity".(5) 5 days later the stock market crashed and the worst economic downturn in American history called the "Great Depression" began. The Depression started in 1929 and would last for a decade until we entered War World II. The Great Depression affected every part of economy and no job was safe. In 1929 unemployment was at 1.5 million and by 1933 unemployment reached over 13 million which meant 1 out of 4 were out of work (3). Some who were successful businessmen before the stock market crash and now selling pencils or apples on the street corners after the crash .Many business closed their doors, factories shut down and banks failed causing homelessness, poverty and general despair on many Americans. Huge numbers of Americans had their lives upset by the Depression. Tens of thousands of migrant farm workers traveled the nation looking for employment. Farming income fell some 50 percent and people went hungry because so much food was produced that production became unprofitable. Many Americans watched their homes and life savings be lost because of the stock market. Confidence in the market was lost and without that confidence investors pulled out and the market collapsed.(4)
Another issue that caused the market to drop has to do with America’s finances. In the 1920’s, stock prices were getting out of hand. Many investors were buying stocks on margin:
The Stock Market Crash of 1929 was a major event in history of The United States affecting thousands of people’s lives. Also changing the way we manage stocks today in the U.S. People back then were forced to sell properties, and personal belongings to stay alive during this time. The people fought through it and made the proper sacrifices to stay alive through the ordeal. With the banks shutting down and losing their savings they still made it through.
The Wall Street Crash of 1929 brought an end to the United States flourishing and opulent economy during the late nineteen-twenties. The crash caused the greatest economic disasters to ever hit the United States, and led many to lose everything they had and no possibility of ever gaining it back. Simple luxuries and basic necessities were no longer available for most individuals. They were the things of the past and as time went on it only seemed to completely disappear from their grasp. This catastrophe would later be known as The Great Depression. The man responsible and credite...