The Crash of 1929
In 1929 the United States Stock Market crashed. This came as a shock to most American’s because during the 1920’s the U.S. Stock market expanded rapidly and seemed to be reaching its peak, however this was due to a period of wild speculation. By late 1928, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the eventual market collapse were low wages, the proliferation of debt, and an excess of large bank loans that could not be liquidated.
During World War 1 the United States government started selling war bonds in order to fund the war. War bonds were bonds that people would buy and pay the government for the war. In return the government would pay the owners of the bonds interest on the war bonds. Every day the value of the war bonds would be printed in the newspapers. Some bankers got the idea to use bonds for the american industry. The bankers on wall street would now market corporate bonds. For the first time the public could invest in private companies on the stock exchange. With the invention of the telegraphic ticker tape machine stock prices could be sent across the country in a matter of minutes. …show more content…
People would often borrow money from banks or they would buy on margin. The public only had to pay about ten percent of the stock the other ninety percent would be on credit. Many people did not realize that the market was backed up by money that was not real. The Brokerage firms set no rules on how much people could get in loan so the brokerage firms would be loaning out about 75% of the money to buy stocks. When it came time to pay the money back many people did not have enough money which caused them to be in debt even
In 1929 the United States Stock Market crashed. This came as a shock to most American’s because during the 1920’s the U.S. Stock market expanded rapidly and seemed to be reaching its peak, however this was due to a period of wild speculation. By late 1928, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the eventual market collapse were low wages, the proliferation of debt, and an excess of large bank loans that could not be liquidated.
During World War 1 the United States government started selling war bonds in order to fund the war. War bonds were bonds that people would buy and pay the government for the war. In return the government would pay the owners of the bonds interest on the war bonds. Every day the value of the war bonds would be printed in the newspapers. Some bankers got the idea to use bonds for the american industry. The bankers on wall street would now market corporate bonds. For the first time the public could invest in private companies on the stock exchange. With the invention of the telegraphic ticker tape machine stock prices could be sent across the country in a matter of minutes. …show more content…
People would often borrow money from banks or they would buy on margin. The public only had to pay about ten percent of the stock the other ninety percent would be on credit. Many people did not realize that the market was backed up by money that was not real. The Brokerage firms set no rules on how much people could get in loan so the brokerage firms would be loaning out about 75% of the money to buy stocks. When it came time to pay the money back many people did not have enough money which caused them to be in debt even