The Stock Market Crash of 1929

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Why is the Stock Market Crash of 1929 so memorable? There were bigger crashes with bigger consequences, so why? Why is this crash ingrained in every American’s brain? It was the starting point of the drastic change in every American’s life. The stock market crash happened between The Roaring Twenties, a period known for its fashion and growth, and the Great Depression, years of unemployment and starvation. This essay will be about the components of the stock market crash, which will be the causes of the stock market crash of 1929, the stock market crash itself and the effects of it.
Life after WWI, also known as the Roaring Twenties, was amazing. People, married or single, lived in prosperity while technology was booming. The radio was invented while cars, phones and air travel became accessible by the public. In general, the American economy was in good shape. To show this, The Dow Jones Industrial Average, the stock index showing the status of America’s economy, quadrupled during the 1920s. Speaking of the stock index, since people had more money to spend, Americans became investors in stocks. Many people invested in stocks on margin, where investors paid part of the total price (usually 10%) and used borrowed money for the rest. A large inflow of money from investing on margin came to the stock market and stock prices rose significantly. The stock prices kept going up to the point where people never thought the prices will ever go down. People unwisely risked their entire life by investing in stocks.
The Federal Reserve did not like this rise in the stock market. Resource was taken away from “productive uses, like commerce and industry.” [Federal Reserve History]. Therefore, the Federal Reserve decided to tighten the mone...

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...nifying the effects of the crash.Last but not least will be the decrease in the supply of money. Due to the Federal Reserve, money supply was not increased and the economic depression became worse due to the rise in unemployment. With these factors and the stock market crash itself, the Great Depression was inevitable.

Works Cited

The Stock Market Crash of 1929. University of Notre Dame. 16 Mar. 2014

Suddath, Clair. Brief History of The Crash of 1929. 29 Oct. 2008. Time Magazine. 16 March 2014.

Colombo, Jesse. The Stock Market Crash of 1929. 17 July 2012. The Bubble Bubble. 16 March 2014.

Stock Market Crash of 1929. Federal Reserve System. 16 March 2014.

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