Stock Market Crash of 1929 The Great Crash

Oct. 2, 2019 Stock Market Crash of 1929: The Great Crash “The singular feature of the great crash of 1929 was that the worst continued to worsen,” wrote Canadian-born economist John Kenneth Galbraith. This was very true because the stock market crash was part of the snowball effect of the Great Depression. This meant that there were so many factors at play when the market crashed, that it was felt in all aspects of life. The impact this had on the people was devastating. This event wiped out businesses and families, forcing people to sell everything they owned. The immediate response of the government was a huge downfall for the crash itself. They did nothing to intervene or stop what was happening. The Stock Market Crash of 1929 is a significant event because it played a large part in the Great Depression, and impacted the global economy. This event called for many reforms and impacted how America conducts business and manages their economy today. As events unfolded during the Great Crash the government’s actions did more harm than good in solving this economic catastrophe. When the market started to crash, many of the political and financial leaders did not take the matter seriously enough. This meant that the situation kept getting worse with no one trying to stop it. Eventually, the government decided to try and do something about this economic crisis, but it was too late. What the government did was raise interest rates and imposed tariffs. This made the cost of living much more expensive which was not what a nation that had very little money needed. Thankfully, because of events like the Great Crash, the government has a much better understanding of what to do in the event that stock market crashes again. During the Great Depression a large portion of the population were forced into government support programs due to the poverty. During the 1920s, people saw many others become wealthy by investing in the stock market. The populace started investing and most did not know what they were doing. The amount that was invested the crash’s impacts were spread a lot farther. These families were forced to sell everything they owned and that sent the country into even more poverty. This forced many to rely on food stamps, welfare and government support. The Crash showed the importance of these programs and how they could be improved and much of that we see today in our social assistance programs. The magnitude of the swings in the market were larger than normal due the amount of margin buying. Margin buying/selling is when the investor only pays for part of the shares. This is good if the share rises, but if it falls you lose what you invested and you still owed money. Margin buying was very popular because of the over confidence in the market. Since so many had invested this way, when the market crashed everyone was forced to sell their stocks that maybe hadn’t fallen as much, and this caused even more selling. In worse case scenarios they were forced to sell their cars or even their houses to try and pay off what they owed. In todays market place there are more stringent rules relating to how much you can borrow against certain types of stocks. These new rules reduce the amount of selling pressure when there is economic uncertainty. The stock market crash of 1929 was clearly one of the most significant economical events in the history of the US and the world. The market regulators and the governments were not prepared for the events that took place, and when they acted their actions often made things worse. Many families suffered great losses financially which caused personal hardship. Many of the mechanics of the market also caused the market to sell off even more when it was already bad. Although this was a very difficult time for many, we have learned important lessons from these events. The origins of many of todays social and economic policies were developed to try to prevent these types of events from happening again. The Stock Market Crash of 1929 is a very significant event for not only America but the world. There is so much we can learn from this event to help us in the future.