The Causes Of The Stock Market Crash
People watched in awe as the stock market came crashing down in smoldering ruins as they hustled to trade in their stock for whatever money was offered for them. Whatever stock was sold only pulled a fraction of the value that was paid by the individual. No matter how many stocks were sold, buying on margin caused most people to be in huge debt and with no …show more content…
Many investors and banks had invested into stock, attempting to upright the plummeting market, but all of their efforts were in vain in stopping the colossal issue at hand. History could have been different if people had noticed the warning signs that were present.
Even though the stock market crash was a disaster, it could have been foreseen. Prices started to decline in late september and early october. Speculation was still rampant in stocks. This practice only works as long as stock prices continue to rise (The).
This covers the major events of one stock before and after the stock market crash. Between 1922 to 1929 DOW rose 400 percent. The following events are in 1929. On september 3 DOW hits pre crash high at 381.17. On october 21 the crash begins and DOW closes at 299.47. October 28 DOW closes at 260.64. On the 29th DOW dropped another 30 points ( ' 'Federal ' ').
Banks created security affiliates with almost identical names to take away the distinction between saving and speculating. The middle class considered these retail brokerage houses and securities affiliates of commercial banks safe investments.Banks also speculated on land development …show more content…
This economic news was taken with a mixed reaction. Public utility regulation is what finally messed up the market. The news was reported on October 16. Following the news a few days later was the panic on October 24. A new record of 12,894,650 shares changed hands that day (Previously the record was 3,875,910 shares changing hands in one day. This occurred on march 12, 1928). Commonly such a change is either caused by demand or worry. Wall Street 's Financial elite attempted to save the market by purchasing huge chunks of stock. This tactic had succeeded in the past ,but this time was a failure and delayed the crash a few days. Although the market was crashing, people refused to see it coming ("Wall").
People remained optimistic about the market with President Hoover and Treasury Secretary Andrew W. Mellon leading the way. With the President having faith in the market, it is possible to be mislead on current events, like ignoring the fact that a recession had started earlier that summer. Billions of dollars were borrowed to create margin accounts