The Stock Market Crash of 1929: Causes, Effects, and Aftermath

The Stock Market Crash of 1929 was caused by several economic factors, including an unstable economy and easy credit access. The crash began on October 24th, 1929, and lasted for four days, wiping out billions of dollars and changing the lives of millions of people. The aftermath led to the Great Depression, which affected both industrialized and non-industrialized nations around the world.

The Stock Market Crash of 1929
Diana Meran

Thursday, October 24th, 1929 was when it all began. The stock market crashed within five
days. The stock market investors traded nearly thirteen million shares and billions of dollars
were lost that day. This event caused major issues in the United States and is one of the causes of
the Great Depression. This economic disaster however did not happen in one day. This
catastrophe was caused by several economic factors. It changed the lives of millions of people
and affected several business. It also became one of the reasons for the occurrence of the Great
Depression.
The Stock Market Crash was a result of an economy that was not steady enough to deal
with the high stock costs.Since 1924, the prices of stock shares that were financed in the U.S.
companies went up. In 1929, more than a billion shares of stock ownerships were being sold and
changing. In the 1920s, the nation’s economy really became the stock market since the total
capital was invested in it. It became easy for people to invest in stock due to the constant use of
buying on margin. That is when an investor could make a small cash down payment on shares of
stock and borrow the rest from a stockbroker ( the book pg901-902). At the time stockbrokers
were lending more than the value of the stocks that the investors were purchasing. Therefore, the
stock prices kept rising faster.
Another factor that caused the stock market crash in 1929 include the easy credit that
people had access to. Amid the 1920s, there was a quick development in bank credit and
effortless access to loans. People started borrowing money to invest in the stock market since the
share prices were rising. Individuals supported by the market's steadiness were unafraid of
obligation. The idea of "buying on margin" permitted regular individuals with minimal financial
knowledge to obtain cash from their stockbroker and put down a small percentage of the share
value.

Americans overlooked these issues and were confident that the economy and the stock market
was booming. They had false expectations and overconfidence in the stock market. This
confidence was also happening in productions such as agriculture and automobile. In the
agriculture production there was a struggle to make profit due to the decreased need of food
supplies. The demand for cars were also at a low rate which caused low sale production for the
firms. The profit results were low which caused the share prices to drop.
The stock market didn’t exactly crash all together in one day. It began on October
24th1929, known as black Thursday, marked the first day of the crash. That day nearly thirteen
million shares were traded. (INSERT BOOK INFO HERE) After the disaster, three leading
banks brought millions of dollars’ worth of shares to reinstate credence in the market. That
action improved the Dow Jones Industrial Average percentage for that day. The following day,
the stock market actually ameliorated even more as the market moved back to six million shares.
The calm and hope was short lived on the following Tuesday, October 29th , 1929. This event
known as “Black Tuesday”, when investors traded sixteen million of the stock exchange.

(Next paragraph : Describe the day of the crash and what happened in new York and the united
states at the time)
The first day when the stock market collapsed that is on the Black Thursday, the Dow
opened at the level of 305.85. However, it dropped 11% straight away, indicating correction of
the stock market (McQuarrie 130). It can be hereby observed that trading was necessarily triple
the normal amount. Again, bankers of Wall Street anxiously purchased shares for sustaining the
same. However, the stratagem properly worked. By the closing of the day, Dow decreased by
roughly 2%. On 25th October, the positive momentum unrelentingly continued. In essence, the
Dow increased by around 1% and closed at 301.22 (James 140). Nonetheless, a short spanned
trading day that is on Saturday eliminated the identified gain. It was registered that Dow closed
at the level of 298.97, as per reports presented by MeasuringWorth.com. Again, on 28th October
also referred to as Black Monday, the Dow dropped by approximately 13% to around 260.64
(Odekon 91). The following day that is on the 28th October also known as Black Tuesday, the
Dow dropped by roughly 12% to around 230.07. As a consequence, the investors got panicked
and investors sold about16410310 shares (Galbraith et al. 180). The four day stock market
collapse can be considered to be the worst decline in the history of U.S. It was observed that the
Dow Jones Industrial Average decreased approximately 25% and lost approximately $30 billion
in terms of market value (Gitlin et al. 132). The consequences of the stock market crash proved
to be more than overall cost of the incidences of World War I. Essentially, this destroyed overall
confidence in the markets of Wall Street and directed towards Great Depression. At the time
when Great Depression started, several individual perceive that it began with the crumpling of
the stock market during October 24. However, it essentially started a month before at the time
when the market dropped 10% in a correction during the period of March.

The stock market crumpling of the year 1929 wiped out several people. People were compelled
to sell out their businesses and cash in all their savings (Galbraith et al. 180). Also, brokers took
off the market their loans at the time when the stock market began dropping. Individuals
scrambled to get adequate money to make disbursements for margin. In this way, people lost
their faith on Wall Street. Again, by the end of the period of 8th July, 1933, the Dow decreased to
around 41.22. In essence, this reflected a 90% loss from the level of highest recorded closing of
381.2 on particularly 3rd September in the year 1929 (Eckes 70). This was regarded as the worst
bearish market in context of loss in percentage recorded in the modern history of the United
States. The greatest gain in percentage of one day also took place during the same time. Records
also reveal the fact that during 15th March of the year 1933, the Dow recorded an increase of
approximately 15.34%, reflecting gain of roughly 8.26points that closed to around 62.10 (Davis
170). The scheduled timeline of particularly the Great Depression shows critical incidents
directing towards highest economic crisis that ever happened in the region of the United States.
Aftermath the crumpling of the stock market of the year 1929, the Great Depression essentially
devastated the entire U.S economy. Wages also declined by approximately 42% since overall
rate of unemployment increased to approximately 25%, rate of growth of the economy also
declined by around 50% and world trade plunged by 65%. On account of deflation, prices also
decreased by around 10% every year between the year 1929 and the year 1933 (Chen et al. 130).
Analysis of the effects of the stock market crash of the year 1929 also reveals the fact that
although stock market crash was not necessarily the sole reason of the Great Depression,
however, it did play a role in acceleration of the worldwide economic fall down (Gitlin et al.
132). By the end of the period of 1933, approximately half of the banks of America encountered
failure and rate of unemployment was advancing 15 million individuals otherwise 30% of the

workforces (Barro et al. 387). There was relief along with reform dimensions that was enacted
by the government of President Roosevelt to reduce the ill impacts of the Great Depression.
Nevertheless, the United States would not entirely turn around until the period of 1939 that is
when World War II revitalized industries in America (Ayden and Eric 115). The Great
Depression that lasted for around 10 years affected both industrialized as well as non-
industrialized nations in different parts of the world.

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