Stock Market Crash of 1929
The roaring twenties was a time of rapid change and improvement. Some tagged it as the best of times of the United States. The nation’s total wealth grew in a rate so fast, it almost doubled. Women were finally allowed to vote due to the nineteenth amendment to the Constitution. The short-haired, shorts-wearing, freer, and relatively more liberated “flapper girl” was born. More people explored different cultures; people started to listen and dance to jazz.
By the end of 1920s, however, the roaring twenties turned 180 degrees. It was October 29, 1929, when the Black Tuesday happened—the fourth and the last day of the stock market crash, the start of the Great Depression.
There are a lot of factors that contributed to the collapse of the stock market. For one, people became overconfident because of the economic boom. They put too much faith in the stock market, loaning money to buy more than they could pay for, thinking the prices will forever go up. People overbought and overvalued the stocks, assuming that the stock market is a one-way ticket to a new life. This resulted to a credit boom.
This posed as problem, especially after the market crashed, and people had no money to pay for their stock’s worth as well as their huge loans from banks. The banks also crashed with the stock market. Many went bankrupt due to overstretching of credit to people who had no means of paying their loans. Considering that this happened after the First World War, a lot of people had no jobs and the economy was very unstable. A huge disequilibrium between the country’s supply and demand prevailed, resulting to a mismatch that produced negative profits.
Panicked, people ran out of the streets during the stock market crash. A lot of people did not understand that the stock market was fallible and economists could be wrong in predicting economic trends. Confusion ensued—there were riots and demonstrations on the streets. The crash caused further massive wage cuts and job loss, causing the unemployment rate to grow from 1.5 million in 1929 to 12.8 million in just four years.
The crash did not directly cause the Great Depression, but it signaled its beginning. It affected the tariff and war debt policies as well as the further escalation of the unequal distribution of income.
What are your opinions about the 1929 market crash and the Great Depression? Feel free to do so by sounding off on the comment section below. You can even connect with me on Twitter, Facebook, and Goodreads. I also invite you to read my historical novel, The Promise of Sunrise.
Dummies.com. n.d. “Analyzing the Causes of the Great Depression.” Accessed July 6. 2017.http://www.dummies.com/education/history/american-history/analyzing-the-causes-of-the-great-depression/.