Imagine stock prices would also increase in value.
Imagine losing all of the money you’ve ever earned in a few years.
This may seem quite far fetched, but the Crash of 1929 made this a reality.
The crash of 1929 established the beginning of America’s most memorible era; the great depression. According to the London Penny Press, following the week of Black Thursday, one could go to New York and see speculators hurling themselves from windows because they had lost everything in the crash. (The Great Crash 1929-Galbraith) Many people had everything they could ever dream of before the crash occured, but after the crash they found themselves poor, hungry, unemployed, and devastated.
ErmDux14: Of course during hard times people need someone or something to blame, and unfortunately the president of the United States Herbert Hoover was a very convinent candidate. Most people didnt realize the nature of the economy. It cant continue to skyrocket forever, and very rarely does it just level off ; therefore the crash was inevitable. Before the crash many previous presidents and their administrations practiced lassiez fairer, and for the most part kept out of the market and its issues. However, in 1929 the situation was so immense that Hoover had no choice but to get involved. He came to the aid of the people as best as he could. Never before had a president had to deal with such a situation. President Hoover didnt recieve enough credit for the things he did. Many didnt realize that there was very little he could actually do.
ErmDux14: The stock market is a very strange thing. It can be very unpredictible, yet patterns can be detected. After the industrial revolution and with America gaining prosperity, the New York stock market found itself doing quite well. The stock market continued to boom which meant real estate and stock prices would also increase in value. One could look in the paper day in and day out, and find his stocks were continuing to rise. The increase sucess in the stock market eventually had to end. Stocks could not continue to increase, the crash was inevitable. Prices would stop rising, people would no longer be buying for an increase, and owning stocks would be useless if no one wanted to buy them. So eventually the market would fall. (The Year of the Great Crash) A law in physics states: ‘What goes up must come down’, and that’s exactly what the stock market had to do.
ErmDux14: In 1928 and 1929 speculation was extremely high. This caused the demand for stocks to increase, which in turn caused the value of the stock to increase, so people started holding onto their stocks because they became more valuable. Many held onto their stocks until they reached a high enough point, then selling them at a much higher price that they had bought them, making a hefty profit. This worked well for a long time, but soon enough skeptical people would lose confidence in the market and would begin to sell their stocks. This ruined the idea that stocks were increasing in value. People no longer held onto their stocks in hopes to make a profit. Instead they would want to sell. Eventually everyone wanted to sell and prices fell drastically. (The Great Crash 1929-Galbraith) This is the way the market crashed in 1929. In years leading up to 1929 when speculation was high and stocks were being purchased, they were bought on a ten percent margin. This meant that investors were putting up only ten percent of the actual price of a stock. The remaining ninety percent was borrowed from banks or brokers. Many thought that they would be able to repay loans and gain profit when they sold their stocks later on. This led to eight billion dollars of stock loans which president Hoover had to liquidate.(The memoirs of Hebert Hoover)
ErmDux14: In September of 1929 the market was very unpredictable, some days doing well other days it fell a little. Many started to notice a downward trend. The industrial part of the country started to slump and the market began to reflect that. Steel production was down, along with freight- car loadings and home building. The U.S. people began to realize