Stock Markets Exposed
Stock Market Crash in 1929?
i need to know the stock Market Crash in 1929.
Public Comments
- check out a history book
- The Wall Street Crash of 1929, also called the Great Crash or the Crash of '29, is the stock-market crash that occurred in late October, 1929. It started on October 24 ("Black Thursday") and continued through October 29, 1929 ("Black Tuesday"), when share prices on the New York Stock Exchange (NYSE) collapsed. However, the days leading up to the 29th had also seen enormous stock-market upheaval, with panic selling and vast levels of trading interspersed with brief periods of recovery. The stock market lost 40% of its value in September and October of 1929. From a high of 381.17 on September 3, 1929, to a low of 41.22 in July, 1932, the Dow Jones Industrial Average lost 89%. Boom-bust theory Keynesian, Monetarist, and Austrian economists agree that the Crash followed an alleged speculative boom that had taken hold in the late 1920s, which had led millions of Americans to invest heavily in the stock market, even borrowing money to buy more stock. Banks lent heavily to fund this share-buying spree. This investment drove share prices up to artificially high levels; the rising share prices encouraged more people to invest, as they hoped the shares would rise further, thus fueling further rises, and creating an economic bubble. On October 24, 1929 (with the Dow just off its September 3rd peak from at 381.17), the bubble finally burst and panic selling set in. Thirteen million shares were sold in the space of one day, as people desperately tried to dispose of their shares before they became worthless. Over the following few days another thirty million shares changed hands and share prices collapsed, ruining many investors. The banks which had lent heavily to fund share buying found themselves saddled with debt, which caused many banks to fail. While millions of people lost their savings, businesses lost their credit lines and were forced to close, causing massive unemployment. The crash dramatically worsened an already fragile economic situation, and was a major contributing factor to the Great Depression. There is a good deal of controversy among economists and historians about the nature of that contribution, though. Some hold that political over-reactions to the crash, such as in the passage of the Smoot-Hawley Tariff Act through the US Congress, caused more harm than the crash itself. Explanation from supply-side economic theory Many commentators view the Smoot-Hawley Tariff Act as a consequence of the Crash, since the act was not signed by President Hoover until June of 1930. However, supply-side economists (and others) argue that stock-market prices anticipate future profits. The Crash reflected investors’ rational expectations that tariffs would raise prices for U.S. consumers (both final consumers and manufacturers that used the imported products as inputs) and reduce firms’ future profits. Supply-siders also blame two tariff laws for the earlier, sharp recession of 1920-21. The Crash of 1929 and the subsequent Great Depression were in part longer and deeper for three reasons: [9] The Smoot-Hawley Tariff Act applied tariffs to more than 3,200 products (many more than the previous tariffs). The tariff rates were very high — averaging 60%. Other countries responded by enacting their own tariffs against U.S. goods in retaliation.
- YES. IT DID BIG TIME...........
