The stock market crash of 1929 was the most significant financial disaster in American history. It set in motion a domino effect of economic ruin, devastating our economy and stripping citizens of their jobs, income and savings. The United State, for all it's splendor and prosperity, had been financially decimated.
As people invested their money into the market, they did not realize that soon enough all of their wealth and money would be ripped from their hands. The Crash had hit and the effects had swept across the investors. The industrial age America was being pulled into a sinkhole that was known as one of America’s biggest predicament in its history. It resulted in a problem known as the Great Depression, a period of time of economic crisis where everyone had suffered due to lack of employment, money, and other necessities to survive. The Stock Market Crash of 1929 was one of the most infamous days in history because of its social and psychological effects on society.
Nothing could have been more stressing to the people than having all of the money tossed away and having no way to get it all back. One cause to this horrible dilemma was the closing of most of the banks in American, each shutting down due to the crash. The people wanted to receive their money back from the banks they had invested in, however the banks weren’t able to repay them. This whole problem had then caused a panic in America. One by one, banks across America were failing and closing down. And as they closed down, hundreds of hundreds of families lost their only chance to regain the money invested into the stocks. Six hundred banks had closed in 1929 and 11,000 of 25,000 had failed, making millions of people lose their life savings.
From 1922, the stock market had been increasing approximately twenty percent a year due to everyone’s share, however may began to worry when it had dropped dramatically during the crash. There were many signs that hinted t...
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This boom took stock market to great heights. From 1920 to 1929 stocks more than quadrupled1 in value. Because of such high soaring stocks, they were considered as extremely safe investments. The common man believed stocks to be a вЂњsure thingвЂќ thus researching little into the company whose stocks were being bought. Investors started purchasing stock on вЂњmarginвЂќ. Investors started getting more and more leverage through margin financing their stock investments. Because of this leverage, if a stock went up by a little percentage, the investor received a magnified profit. Unfortunately, this also works the other way around. Small losses were also amplified. Investors went to the extent of mortgaging house and property because most of them never thought that a crash was possible. They thought that the market always вЂњwent upвЂќ. Tempted by promises of "rags to riches" transformations and easy credit, most investors gave little thought to the systemic risk that arose from widespread abuse of margin financing and unreliable information about the securities in which they were investing.