The 1929 Stock Market Crash

Thursday, October 24th, 1929 has the incredulous honor being called Black Thursday. It was on this day that the New York Stock Exchange crashed, and with it ended the “Roaring Twenties”, and initiated the Great Depression. It has been widely speculated in books and magazines, but what really happened on that day?What events led up to the fateful day? What were some warning signs, and what could be done to have stopped it?
In the 1920s, things were really unstable in the US and around the world.With the rapid increase in industrialization, which fueled the economy, combined with the many technological improvements had leading economists believing the growth would continue. During this inflation period, wages increased along with consumer spending, and stock market prices were on the rise.Most people wanted to take advantage of the rising prices, which put billions of dollars into the stock market, and people were buying on margin (buying stocks with borrowed money, then using the earnings to pay back the loan). The number of dollars put into the stock market created unsecured consumer debt and left the market unbalanced.Many investors wanted to make a lot of cash, so they decided to invest their life savings, mortgage their homes, and cashed in their “safer” investments like bonds, and bank accounts.The rising prices had some economic analysts warning of a coming correction. Many companies and banks, eager to increase their profits, began to speculate dangerously with their investments.In late October 1929, the buying craze slowly decreased, and the selling of stocks was even crazier.
On Thursday, October 24, 1929, prices rapidly fell, as investors began to sell their stocks. By the end of the trading day, the New York Stock Exchange had lost four billion dollars, and the exchange clerks stayed at the NYSE until five o’clock in the morning to clear all the previous transactions. The following Monday, the realizati…


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