The 1929 Stock Market Crash
Name of Student
Institution Affiliation The Stock Market Crash of 1929 Although not the sole major economic development in American and global history, the stock market crash of 1929 is one of the most prolific. This is due to the fact that it was, as will be argued in this paper, the catalyst for the greatest economic depression in history. Playing out over several days, the crash had long-term consequences for American society at every level, from the everyday individual right up to companies and national banks. To be analyzed are the causes, participants, and trajectory of this major event: from the stock market boom of the 1920s and subsequent euphoria and margin buying, to its eventual collapse …show more content…
As a result, the second cause of the stock market crash came into play: margin buying. What this meant was that if the interested party did not have enough money, they could give the little that they had and loan the rest. Much like purchasing on credit, buying stock via margin, then, presented a great enticement as a buyer could enjoy full capital gain at a fraction of the required amount (White, 1990). Banks played a big part in margin buying, as commercial bank loans were used as a means of financing. According to White (1990), they offered new financial services such as trusts and insurance in order to increase their fee income and capitalize on the stock market boom. In so doing, they also increased their role as brokers between the industry and public. However, seeing as many saw the stock market as a way of getting rich fast, they delved into trading without much experience, resulting in a …show more content…
The rapid decline in stock prices meant that many people lost their savings and retirement funds. In order to repay their loans (and the interest rates they incurred), people had to sell their assets, including their homes. Those who had money vested in bank accounts also lost their money as banks had used their funds to invest without their knowledge or permission (Amadeo, 2018). This resulted in a public mass rush to withdraw their savings from their bank accounts, which led to banks’ failures and a further plummeting of the
Name of Student
Institution Affiliation The Stock Market Crash of 1929 Although not the sole major economic development in American and global history, the stock market crash of 1929 is one of the most prolific. This is due to the fact that it was, as will be argued in this paper, the catalyst for the greatest economic depression in history. Playing out over several days, the crash had long-term consequences for American society at every level, from the everyday individual right up to companies and national banks. To be analyzed are the causes, participants, and trajectory of this major event: from the stock market boom of the 1920s and subsequent euphoria and margin buying, to its eventual collapse …show more content…
As a result, the second cause of the stock market crash came into play: margin buying. What this meant was that if the interested party did not have enough money, they could give the little that they had and loan the rest. Much like purchasing on credit, buying stock via margin, then, presented a great enticement as a buyer could enjoy full capital gain at a fraction of the required amount (White, 1990). Banks played a big part in margin buying, as commercial bank loans were used as a means of financing. According to White (1990), they offered new financial services such as trusts and insurance in order to increase their fee income and capitalize on the stock market boom. In so doing, they also increased their role as brokers between the industry and public. However, seeing as many saw the stock market as a way of getting rich fast, they delved into trading without much experience, resulting in a …show more content…
The rapid decline in stock prices meant that many people lost their savings and retirement funds. In order to repay their loans (and the interest rates they incurred), people had to sell their assets, including their homes. Those who had money vested in bank accounts also lost their money as banks had used their funds to invest without their knowledge or permission (Amadeo, 2018). This resulted in a public mass rush to withdraw their savings from their bank accounts, which led to banks’ failures and a further plummeting of the