Saturday, November 11, 2017
The Stock Market Crash of 1929
On October 29, 1929, the stock market crashed. The amount of money that was lost was crippling to thousands of investors in the United States. In September of 1929, stock prices began to rapidly fall when 12,894,650 shares were traded on October 24th, which was known as Black Thursday. In this frenzy of share swapping, companies and bankers tried to rally and save the market by buying a large portion of the stock, but in the end, it only delayed what would happen the following week. On Tuesday, October 29th, stock prices collapsed and 16,410,030 stocks were traded, resulting in billions of dollars lost. The market's crash wiped thousands of people out, and as a result of the money loss, many were forced to sell their businesses and use their own life savings. The Crash was a direct cause of the already inevitable Great Depression, and during the Great Depression, the unemployment rate rose to 25% and wages fell by 42%. The Stock Market Crash was clearly one of the most shocking turn of events in United States history. Investors were comfortable throughout the 20's and did not have to worry much until October 24th, when the downward spiral began. What were the main causes of the crash, and how big of an impact did it have on the cause of the Great Depression?
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Since many people had invested a lot of their money into the stock market, when it crashed many families could not support themselves. The crash was not expected so almost everyone in the stock market lost all the money invested. Although the Great Depression was already present, it was accelerated by the Crash of 1929 because companies had no need for jobs which left many workers unemployed. As we manage the stock market now, we must use knowledge of past stock market crashes to prevent future crashes.
ReplyDeleteI agree with your point as well. In addition to the point you made, the stock market crashes and unemployment rate tend to be a vicious chain reaction, one setting the other off and never ending until someone figures out how to make things better. In the case of 1929, the main cause was that everyone was hoarding money to themselves and never really selling in an attempt to get more, which led to the crash as we know, which led to more and more unemployment rate, which led to business crash because many couldn't afford to sell or sold at such cheap price that they weren't able to benefit from, which led to even more unemployment, and etc.
DeleteI agree, for the individual, the Stock Market crash of 1929 was devastating but only a symptom of greater underlying problems such as investment, loans on investments, overproduction and underconsumption, and a bad crop season. The Stock Market crash also triggered things such as bank failures as thousands tried to pull their money out of banks in fear of bank failure which, ironically, causes bank failure. The government also placed taxes or tariffs on imports and this led to other countries taxing American goods which radically made the already devastating situation worse. Today, as seen with the great recession, that saving major banks is important in stabilizing the economy and placing more taxes on imports is not a solution.
DeleteOnce the market started to crash and everyone started to sell they only made the situation worse, the market went down further and people got very little money that soon would be gone. Like the guy that invested 20 million back into the market just so the banks could sell their stocks at a decent rate. Classic example of me over them
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