The 1920s was a time of peace and great prosperity in the United States. There was an increase of industrialization and there are new technologies such as radios and automobiles. The airflight was becoming widespread and because of these new innovations and technology, the economy benefited (Stock Market Crash, n.pag.).
Many investors rushed and bought many shares and everyone thought that the stocks were safe and there was indeed an economic boom. There were around 400 millionaires instantly created from 1921 to 1929 (Stock Market Crash, n.pag.).
There were six reasons why Americans invested in the Stock Market. The rising stock dividends were viewed by the people as an easy way to get rich. There was an increase in personal savings. At this time, money in the banks are available in a lower interest, there was indeed an easy money policy in banks.
While the companies choose to invest their over-production profits to new production, the Americans were encouraged to buy more stocks. The lack of stock market regulation turned the stock market in a pyrammid game. There were no limitations and buyers are free to buy more and more stocks. The last reason was the Psychology of consumption. The Americans believed that they were living in prosperity, thus, they became optimistic (Schultz, n.pag.).
In September 29, fluctuation of stocks began and the analysts thought that it was all temporary but On October 24, 1929, the people of America who owns stocks started to dump their shares and this idea of selling stocks continued until Monday, October 28 and finally, the following day, the “Great Crash” began (Schultz, n.pag.).
While most people and economists view the stock market crash of 1929 as the cause of the “Great Depression”, the 1929 stock market crash was a result of a slowing economy. The America consumers’ desire expensive items like refrigirator, radios and automobiles went down and most Americans were satisfied in what they have.
In return, this actions of the consumers affected the copmpanies who produced these products and the over-production which happened earlier that year. The companies who invested more on factories and machineries lost their profits because the consumers were already satisfied. They rather place their money in stocks than have new items in their house and this resulted to a slow economy which led to an unstable stock market.
Schultz, Stanley K. American History 102: American Civil War to the Present. retrieved May 8, 2008. http://us.history.wisc.edu/hist102/lectures/lecture18.html
“Stock Market Crash of 1929”. Stock Market Crash. (2006). retrieved May 8, 2008. http://www.stock-market-crash.net/1929.htm
“1929 Stock Market Crash”. retrieved May 8, 2008. http://www.angelfire.com/co/pscst/stock.html
- The Stock Market
In response to the worldwide depression and the 1929 stock market crash, Congress passed the Securities Act in 1933. The stock market crash was primarily attributed to the fraudelent sale of bad stocks, notes, bonds and a number of other securities. These sales were said to have...
- Evaluate the Case for and Against Buffer Stock Schemes
A buffer stock scheme is an intervention carried out by the government which aims to limit fluctuations in the price of a commodity. It involves the government and/or local authorities buying these storage stocks and selling them back to the famer. Price stability is indicated by low inflation whereby the...
- The Dot Com Crash
1.What is the intended role of each of the institutions and intermediaries discussed in the case for the effective functioning of capital markets? Broadly, the institutions and intermediaries' primary role involves channeling investors' savings and funds to new companies that require capital to finance and...
- Ethics_ Goldman Sachs
Goldman Sachs, founded by German immigrants, began as a small humble business looking to succeed. Over time their business strategy changed and they entered into ethical and legal issues they had not encountered before.
In the late 1920s Goldman Sachs began maliciously investing in companies to drive their...
- Stock Holdings Final
Why we kept these stocks;
Focus on FUTURE & what was created or expanded. Compay changes in management or business structure. Etc.
Many high profile insider investments lead me to believe in the company. Mr. Morfit, General Director of Microsoft, is stepping up to the plate again and buying...
- Model Stock Research for the Time Warner Company
Being one of the fastest-paced and highest-profile industries in the world, the media sector has been in a whirlwind of change this past decade. There has been an explosive boom and bust and, of late, boom again, of internet technology. This has dramatically influenced media delivery....
- Stock Dividend
* A corporate distribution to shareholders declared out of profits, at the discretion of the directors of the corporation, which is paid in the form of shares of stock, as opposed to money, and increases the number of shares.
* A dividend paid as additional shares of stock rather than as...
- Introduction to Financial Management
In the United States we have two different kinds of stock exchange the NYSE and the NASDAQ even though they have some similarities they are different in so many different ways. This paper will discuss how the NYSE and the NASDAQ operate, how they are different and what is the public company...
- The Cause and Effects of the Great Depression
Many people speculate that the stock market crash of 1929 was the main cause of The Great Depression. In fact, The Great Depression was caused by a series of factors, and the effects of the depression were felt for many years after the stock market crash of 1929. By looking at the stock market crash of...
- Are American Corporate Ceo’s Overpaid_
I believe that CEO's are paid to much because it does not seem to matter just how well the company does while they are running it they still seem to make a ridiculous amount of money. This is wrong because they are supposed to be paid according to how well that the company does but even when it does poorly...