How the Stock Market Crash of 1929 Affected the United States Essay

The year of 1929 is marked by the personal line of credit foodstuff force in which or so consider to be the commencement exercise of the Great Depression. This was non the sole bm of the Great Depression, though. The Stock Market Crash was caused by an frugality that was non stalls enough to handle the broad(prenominal) deport prices. The Stock Market Crash helped total on the Great Depression which laboured the linked States g e trulywherenment to shake changes in the regulation of gestate exchanges, providing oftentimes broader protection for giveors.The linked States was a one-year-old state and was not ever so as proponentful as it is straight off or was in 1929. The joined States was skeletoned from europiuman citizens who wanted to start their lives over. So the unite States had relatively little coin comp bed to the monetary status of the rest of the world. London at the time was considered the center of finance. The united States borrowed coin from Eng fetch and otherwise countries to spur its industry. By 1960 it seemed that the United States would inevitably be the worlds most important business and fiscal power. The Civil War provided a rise for industry, which jump-started the gradual shift of financial power from London to New York. The United States had a important asset in the form of land.The United States was forced to develop itself originally it could worry astir(predicate) competing with the world. Hence, the amount of uppercase was far greater once easy to be spent outside the United States. The year of 1914 plenty be considered the appoint at which the United States would never be second in the world again. (Axon, 32) Europe was stricken with war and the United States was rancid to for supplies. The wealthy European countries were ravaged by war because of casualties, economic losses, and expensed of war over quadruplet years. (Axon, 33) The United States precisely was in the war for a year and did not stimulate its country damaged by the war. The UnitedStates emerged from knowledge domain War I being owed billions of dollar signs for having financed most of the war and was decl atomic number 18 to be the leader of the Western world. The former(a) 1920s were a time of thriving industry, of soaring hope and confidence. The ups and downs of the nervous strain grocery store were wakelessly noticed by the median(a) the Statesn. The av erage American was a good deal(prenominal) relate with their daily life than the state of the deport foodstuff.The sparing was such that many impudent products and services were available to almost everyone, including the automobile, radios, and other products for the home. The have a bun in the oven grocery was controlled by professionals that worked for vauntingly firms who had candid financial business which do it easier to use the food trade advantageously. Small investors were never shut out of fence high room how ever the professionals pay for dribble tips and excessively rigged the commercialise so that certain(a) investment trusts would rise and fall.This gave small investors a much harder time in settle gold through the extraction commercialize. As the grocery began to grow more small investors entered the plot and were really just gambling their specie. to the highest degree were not successful notwithstanding whatever got lucky or got a good armoury tip and rode the rising commercialize until they bemused their money too with the Stock Market Crash.At this time nothing had any reason to believe that the livestock market place would not keep rising. end-to-end the 1920s a long amplify took stock prices to peaks never before seen. From 1920 to 1929 stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market. (PBS) As the market grew, the stock market became a counseli ng of life and was a extremely discussed topic among mutual Americans who were eager to give rise a piece of the pie. Americans no lifelong were connected by the leafy vegetable deposit of making a life for themselves alike at the birth of the nation. The 1920s were an era of revolution in ideas, beliefs, inventions, and ways of living.The nation was totally different subsequently World War I than before. The United States experimented with Prohibition. The nullity age rose from the streets of Harlem, NY. Women got the right to vote. The intact of family was convinced that anything was possible, not only in the stock market and finances, but also in every expression of life. (Sherrow, 12) Most of this is pushn for granted now because what was considered a modernistic idea seems prosy and because the Stock Market Crash of 1929 overshadowed the great improvements in society.Societys positioning affected Wall Street, though. The large place firms musical theme that th e governance should not be allowed to interfere with the speculation of finances. This is a common feeling when the economy is smashing, that the government is constantly trying to oppress. The exact opposite is seen when the economy is in a depression and everyone turns to the government for help. The federal government was very express in its control of the market and could not impose new control efforts at the time because the nation would not agree.As we know now, the stock market would hurt been better off if the government would set out stepped in when the stock market became hazardously high. One of the main causes for the stock market to become solemn was because large firms or groups of individuals practiced unfair techniques when buying and change stocks. This was known as rigging the market. The stock market flows more smoothly through shape buying and carrying activeness but when certain groups tried to ingest money in an unfair way they hurt others in the p rocess which severe capital. Large pools could control prices more than was rubicund for the stock market.Some make fortunes others lost everything. An example was a cigar stock at the time was selling for $115 a share. The market collapsed. I got a mention from the company president. Could I loan him $ two hundred cardinal? (Blaszczyk and Scranton, 337) To the public, the stock market seemed as though it would surely make them money, and were buying. The furor was a frenzied finance that made Ponzi look like an amateur. (Blaszczyk and Scranton, 337) The insiders were controlling the market though, setting the stage for the greatest doss down of all time. The elaborateing economy in the United States was not typical of the intact world. England had its share of tasks concerning currency. The sight wanted favorable to again be used as it was before the war.They felt that it was a valuable metal and provided a solid hind ending for currency. The British government finally a avariciousness, after a lot of pressure, to re-instate the gilded specimen but it was a new reading material where gold would be used to back up paper money and gold would be used to handle external debts. The beat out was put into use, which created a problem. The pound was overvalued in terms of other currencies meat that people had to pay more to by British goods. Naturally, people bought goods elsewhere to nullify the currency exchange rate of the pound. alternatively of realizing what was determineing, the British tried to lower the price, which in turn lowered wages and caused strikes to disrupt out in England around 1926.Germans were not better off. Of program their country was destroyed physically by war, but the financial administration was very poor at this time in Germany. Germany was forced to pay reparations according to the accordance of Versailles plus the inflation was so mischievously that German currency was absolutely worthless. The German public was enraged active this and the fact that they lost a lot of what they considered their land because of the war. The new government installed in Germany after the war called the Weimar republic was a democracy. The German public could not adjust to this making governmental intervention a surd task. France and the rest of Europe faced the same effects. Inflation was uncontrolled and the political systems were thrown into upheaval.Since the United States was so financially plug away at this time, countries like Britain and France naturally asked for assistance. They appealed to the federal Reserve progress to make cuts in interest rates in the United States. This would make the United States less winning to investors and would maybe cause investment in Europe instead. By increasing the money supply in the United States, the dollar would be worth less and make American goods more expensive succession lowering the price of foreign goods.At this time the United States thought that this would not benefit it at this time. After all, the economy was booming, nearly everyone was working, people were making money from the stock market, and life was generally pleasant. winning actions that would have hurt the United States would not have been appreciated by business community and normal citizens as well. The United States give little attention to these pleas. There has always been talk that if the Federal Reserve Board would have stepped in that on that point would have been no boom in speculation, greatly reducing the risk of a crash.The rivalry against this is the fact that the Federal Reserve Banking system has little control of the economy, but can only make changes spurring offset or decline. Other theories put the sentence on foreign countries too. One allegation states that stock speculation and gambling the market was a trait the United States adopted from Europe. However, the get rich quick carriage of Americans is just as great as the Europeans . The California Gold Rush and the Florida historical Estate Boom prove this. The United States Government can still immerse most of the blame. At that day and age, it was hard to expect economists to predict exactly what would happen with the stock market rising so rapidly.They could have realize that it was a unreliable situation. The government felt too jeopardise by business. When the government stepped in businessmen, bankers, and society in general criticized them for trying to take action when none was deemed necessary. By 1928 the stock market had reached the point of no return. The stock market fluctuated greatly and the risk of the stock market became greater. The rigging of stocks became so common that people of great esteem thought nothing wrong of manipulating stocks in way that actually defrauded the public. By the inevitability of a market collapse was upon the United States but nobody expected that a full-fledged business depression was to come about because of it. (Axon, 47)At this time three billion shares were traded each day. Slowly it rose to four and five million shares per day. By November 1928 a daily volume of six million shares was reached. It must be realized that industrial stocks rose at a normal rate at this time, approximately ontogenesis by a third. The individual stocks are what marked disaster. For example, the Radio Corporation of America (RCA) grew an unheard of 400 percent in 1928. In 1929 the stock market act to grow at a dangerous pace. People borrowed money at high interest rates figuring to make enough in the stock market to cover the interest and still gain ground greatly.With people concentrating so much zip fastener in the stock market, few realized that production could not keep up with the stock market. The automobile and construction industries had a small decline but people disregarded it as normal. Few Americans inflexible to sell-out for a profit. Most refused to believe the boom was coming to a halt. Stock market prices were now driven up by the sheer power of speculative demand. In other expressions, there was nothing concrete to back up the stock prices.By mid-October, the stock market was in a bad state. No major boom could revive the quality stocks that took a knowing dive. Fear began to take the place of greed in Wall Street. The word sell was now heard more than the word buy. Brokers asked for more margins or more cash from the customer to be paid into their accounts. The customers, of course, could not afford it and the brokers sold the stock. This pushed stock prices even lower. Everyone began banking the large operators on Wall Street would step in because they had much more to lose than the small investor.The problem was that they could not afford to because they were already in trouble because of the sharp decline in their stocks. October 24, 1929 was called Black Thursday because this hope was squeeze and stock prices plummeted. Even after this there was sti ll around hope. That same day, bankers travel in trying to restore some of the mess. They were trying to restore some of the optimism in the market. This was not the case as the following(a) Monday, October 28, 1929, the market was flooded with selling orders. The handsome bankers were no longer there because they were in their own trouble.The people that were hurt the most are those that put their whole lives into the stock market and now walked the streets, stunned about their losses. Some of the more badly declining stocks from 1929 to 1933 are as follows Consolidated Cigar common stock fell from $115 to $3. General Foods dropped from $82 to less than $20. General Motors fell from $91 to less than $8. US Steel dropped drastically from $261 to just over $21. The railroad stocks were derive the hardest. The New York Central Railroad but fell to $9 from $256. (Klingaman, 111) The Stock Market Crash of 1929 marked a new era that was not immediately realized. fairish as the risi ng stock market had provided industry with the capital to expand, the falling market caused industry to move into recession.