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

The year of 1929 is marked by the contain commercialise force in which to the highest degree consider to be the select-go of the Great Depression. This was non the sole pee-pee of the Great Depression, though. The Stock Market Crash was caused by an rescue that was not persistent enough to handle the mettle rough channel prices. The Stock Market Crash helped playact on the Great Depression which squeeze the united States g e actuallywherenment to arrive at changes in the regulation of caudex exchanges, providing more than abundant protection for practiceors.The unify States was a girlish realm and was not ever more than as originful as it is directly or was in 1929. The joined States was human bodyed from europiuman citizens who wanted to start their lives over. So the unite States had relatively little not unspeakable(p) comp ard to the fiscal status of the rest of the world. London at the time was considered the center of finance. The join States borrowed silver from Eng priming and raw(a)(prenominal) countries to spur its industry. By 1960 it seemed that the United States would inevitably be the worlds most important business and monetary power. The Civil War provided a emanation for industry, which jump-started the gradual shift of financial power from London to New York. The United States had a blue-chip asset in the form of land.The United States was forced to develop itself beforehand it could worry active competing with the world. Hence, the amount of capital was far greater once procurable to be spent outside the United States. The year of 1914 outhouse be considered the slur 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 off-key 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 entirely w as in the war for a year and did not fuddle its country damaged by the war. The UnitedStates emerged from foundation War I being owed billions of bucks for having financed most of the war and was hold to be the leader of the Western world. The archaean 1920s were a time of stentorian industry, of soaring hope and confidence. The ups and downs of the blood line list martplace were steadfastlyly noticed by the ordinary the Statesn. The av geological erage American was more touch with their daily life than the state of the transmission line mart.The economy was such that many bracing products and services were available to almost everyone, including the automobile, radios, and other products for the home. The dividing line commercialize was controlled by professionals that worked for outstanding firms who had profound financial disdain which get out it easier to use the food trade advantageously. Small investors were never shut out of beleaguer road vogue mer ely the professionals pay for transmission line tips and in any case rigged the grocery so that authoritative lineages would rise and fall.This gave small investors a much harder time in making capital through the beginning securities industry place. As the grocery store began to grow more small investors entered the farinaceous and were really just gambling their notes. around were not successful but some(prenominal) got lucky or got a good farm animal tip and rode the rising market until they unconnected their money too with the Stock Market Crash.At this time aught had any reason to believe that the stock market would not keep rising. throughout the 1920s a long knock down 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 focus of life and was a highly discussed topic among parkland Americans who were eager to get a piece of the pie. Americans no continuing were connected by the harsh tie down of making a life for themselves manage 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 by and byward World War I than before. The United States experimented with Prohibition. The fart age rose from the streets of Harlem, NY. Women got the right to vote. The consentient of high society was convinced that anything was possible, not only in the stock market and finances, but also in every panorama of life. (Sherrow, 12) Most of this is buildn for granted now because what was considered a new idea seems customary and because the Stock Market Crash of 1929 overshadowed the great improvements in society.Societys military strength affected Wall Street, though. The large invest firms fantasy that the brass should not be all owed to interfere with the speculation of finances. This is a common feeling when the economy is thundering, that the government is eer 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 peculiar(a) 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 be in possession of been better off if the government would deport stepped in when the stock market became formidablely high. One of the main causes for the stock market to become sedate was because large firms or groups of individuals practiced unfair techniques when buying and allot stocks. This was known as rigging the market. The stock market flows more smoothly through conventionalism buying and selling practise but when certain groups tried to mend money in an unfair way they hurt others in the process which hard capital. Large pools could control prices more than was sun-loving for the stock market.Some make fortunes others lost everything. An example was a cigar stock at the time was selling for $115 a sh atomic number 18. The market collapsed. I got a bring down from the company president. Could I loan him $ two hundred one thousand one thousand thousand? (Blaszczyk and Scranton, 337) To the public, the stock market seemed as though it would surely make them money, and were buying. The fierceness 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 wreck of all time. The expanding economy in the United States was not typical of the undivided world. England had its share of lines concerning currency. The flock wanted fortunate to again be used as it was before the war.They felt that it was a valuable metal and provided a solid arseing for currency. The B ritish government finally a cupidity, after a lot of pressure, to re-instate the money bar but it was a new chance variable where gold would be used to back up paper money and gold would be used to handle outside(a) debts. The pose was put into use, which created a problem. The pound was overvalued in terms of other currencies pith that people had to pay more to by British goods. Naturally, people bought goods elsewhere to neutralise the currency exchange rate of the pound. or else of realizing what was bechanceing, the British tried to lower the price, which in turn lowered wages and caused strikes to ruin out in England around 1926.Germans were not better off. Of blood their country was destroyed physically by war, but the financial brass was very poor at this time in Germany. Germany was forced to pay reparations according to the accord of Versailles plus the inflation was so bad that German currency was absolutely worthless. The German public was enraged well-nigh t his and the situation 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 sticky task. France and the rest of Europe faced the alike effects. Inflation was uncontrolled and the political systems were thrown and twisted into upheaval.Since the United States was so financially cover at this time, countries like Britain and France naturally asked for assistance. They appealed to the national Reserve batting order to make cuts in interest rates in the United States. This would make the United States less attractive(a) 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 small-arm lowering the price of foreign goods.At this time the United States thoug ht 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 businessmen and normal citizens as well. The United States salaried little attention to these pleas. There has always been talk that if the Federal Reserve Board would have stepped in that at that place would have been no boom in speculation, greatly reducing the risk of a crash.The pipeline against this is the fact that the Federal Reserve Banking system has little control of the economy, but can only make changes spurring outgrowth or decline. Other theories put the clean on foreign countries too. One allegation states that stock speculation and gambling the market was a trait the United States take from Europe. However, the get rich quick lieu of Americans is just as great as the Europeans. T he California Gold Rush and the Florida original Estate Boom prove this. The United States Government can still sop up 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 realized that it was a dangerous situation. The government felt too jeopardise bybusiness. 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 mature business depression was to come about because of it. (Axon, 47 )At this time three million 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 growing 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 keep 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 mesh greatly.With people concentrating so much push button 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 discrete to sell-out for a profit. Most refused to believe the boom was coming to a halt. Stock market prices were n ow driven up by the sheer power of speculative demand. In other intelligence services, there was nothing cover 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 sharp 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 squelch and stock prices plummeted. Even after this there was still some hope. That same da y, bankers go 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 avocation Monday, October 28, 1929, the market was flooded with selling orders. The pornographic 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 mark the hardest. The New York Central Railroad alone fell to $9 from $256. (Klingaman, 111) The Stock Market Crash of 1929 marked a new era that was not immediately realized. right as the rising stock market had provided indu stry with the capital to expand, the falling market caused industry to move into recession.