The Stock Market Crash occurred in October 1929. It was an incident which had a devastating effect on the American economy. It also contributed significantly to a global downturn in economy, ushering in the Great Depression.
The market crashed when people who owned stock (shares in a Company), started selling them very quickly. In a single day in October 1929, nearly 16 million shares were traded. All the people who owned stock felt that the share price was falling rapidly, so everyone now wanted to get rid of the shares.
Before the crash happened, there was a rapid growth in the American stock market. People started speculating by buying and selling the shares, hoping to make a quick profit. As a result, many stocks artificially rose in prices. For instance, a share which was fairly priced at $5 would rise to $10 or even more because of the speculation and artificial trading. The artificial rise in the price of the stock was meant to come down eventually.
Many economic experts warned people about this but no one took them seriously. Another reason for the stock market crash was the overconfidence of the investors. People who had little financial security took loans and speculated on the stock market.
At one side, this overconfidence artificially inflated the share prices. At the other hand, it placed a large number of people under a debt as they hoped to make a quick profit from the artificially raised stock prices. When the artificial prices crashed, many of these investors became indebted with no means to pay the loan. So not only banks and entire institutions but a large number of people also went bankrupt.
In September 1929, there was a brief decline in the stock market. Then the London Stock Exchange crashed. This made the American investors apprehensive about the New York Stock Exchange. People started fearing that they might lose their money if they didn’t sell their stock.
This ultimately led more and more people to start selling their stock. By the time the stock market crashed, some stocks were so low-priced or worthless that there was no one ready to purchase them.
The Stock Market Crash of 1929 started a period of political decline in United States. It also led to an overall downturn in the global economy. As the stock market crashed, many banks who had speculated on the stock market also crashed.
This created a fear among the people that they might lose their bank deposits. So millions of people flocked to the banks to retrieve their money. This, in turn, led thousands of banks to fail. By 1933, more than 4,000 American banks had closed. Many banks were unable to pay back the depositors which left many depositors penniless.
The Stock Market Crash of 1929 marked the beginning of the Great Depression. The Great Depression gripped the American economy and left millions of people homeless and jobless. There was a rapid rise in the unemployment rate. Basic commodities such as food became too expensive.
Farms stopped producing enough food supplies, people no longer had money to spend and as a direct result, many industries no longer had any customers left. This left many banks, companies and industries bankrupt after the stock market crash. At the end of the crash consumers simply had no money. Most struggled to make ends meet and have enough money to buy food.
In many ways, the Stock Market Crash of 1929 contributed to World War II and became one of its key factors. The market crash ushered in Great Depression, not just in United States but worldwide. European nations in particular were affected as their economies were closely connected to the U.S. economy.
The Great Depression led to rampant unemployment, strikes and protests by workers and an increasingly sympathy for communism. It also allowed many fascists leaders to criticize the present regimes and take over the government by promising a more stable economy.
Leaders like Benito Mussolini and Adolf Hitler used the after effects of the Great Depression to their benefit. So in a way, it can be said that the stock market crash of 1929 was one of the causes that led to World War II.
As noted above, one of the direct consequences of the stock market crash of 1929 was the Great Depression. The Great Depression, in turn, contributed significantly in creating the conditions for another war between European nations. With a downturn in economy, relations between various nations deteriorated. At home, the American economy for the next decade.
When the stock market crash of 1929 happened, Herbert Hoover was the American president. Hoover tried to implement various policies to improve the economic situation. However, he staunchly opposed any intervention of the government in providing direct relief to the people.
This greatly angered the American people who were homeless, jobless and starving in the millions at the time. So when Hoover completed his presidential term, he lost the nomination for the next presidential election. Instead, Franklin D. Roosevelt was elected the next president.
When Franklin D. Roosevelt became president in 1933, the Great Depression was in full swing. The American economy had hit rock-bottom and the after effects of the stock market crash continued to haunt the nation. As the president, he brought up the New Deal – a large number of reforms and legislation which finally brought much-needed relief to the American citizens.
As a result of his measures, the American economy rapidly recovered and improved. Roosevelt also implemented policies that would better regulate various aspects of the country’s economy. It was largely thanks to his robust and visionary relief efforts that the Great Depression finally came to an end in the United States.
In the ‘conspiracy world’, it is thought that the largest Banks deliberately withdrew funds from the money supply to create a shortage of money within the system and caused the panick on purpose, which would have enabled the banks to buy up the stocks of companies at a very cheap prices when everyone else was selling. This would have also consolidated the largest banks power within the banking system and enabled them to buy up rival banks who had gone bust.