The Causes and Effects of the Stock Market Crash of 1929
Before the Stock Market Crash of 1929
- Prior to the crash many Americans experienced great wealth and excess because of the stock market
- Inflation was low while at the same time real income and production were both rising
- Several companies were increasing their dividend payouts
Economical causes
- Too much industry overproduction - many goods were not being purchased
- Market value based on borrowed money and over speculation instead of real value
Before the Stock Market Crash of 1929
1920s Booming Economy
- The 1920's post WWI era was one of tremendous growth, optimism, and prosperity.
- Americans had returned victorious and optimistic from the First World War.
- Industries had been greatly expanded to support the war effort, and these helped to establish capital to fuel the growth in the 1920's
Black Thursday
- October 24th, 1929
- Stocks fall drastically
- Brokers panic and make margin calls but no one can pay them
- On Black Thursday, a record 12.9 million shares were exchanged.
Sources
Aftermath
- After the Stock Market Crash, people rushed to the banks to salvage their life savings.
- Unemployment
- Billions of dollars were lost
- https://de.wikipedia.org
- http://www.history.com
- https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
What is a Stock Market?
The Stock Market was created in 1792 where stocks and bonds were "traded" – meaning bought and sold .
A business shares its assets and earnings with the general public to acquire money.
What is a Stock Market Crash?
The steep fall in the prices of stocks due to widespread financial panic.