The Stock Market Crash Of The 2000's
As the Roaring Twenties decade was winding down to an end, the strength in America’s economy continued to grow weaker. The stock market had been falling at such a rapid pace, that it had become questionable on whether or not the United States would be able to recover, because it had led the United States into a depressing period in history.
The stock market had officially reached it’s lowest point on October 29, 1929. Leading up to this day, there were several stock markets across the country that had begun to lose value of majority of their stocks, compared to the beginning of the decade (Selby). This was because A clear representation of the stocks falling was known as the American Stock Exchange. The American Stock Exchange, which can often …show more content…
be referred to as the New York Stock Exchange or the Curb Exchange, showed the most significant adjustments that showed the values of many stocks as they began to fall from their highs, while also comparing them over the years prior to the crash (Selby).
The stock market had crashed when the banks had begun to fail. The virtue of the stock’s desirability caused the prices to rise (Selby). Companies were forced to raise their prices so they would be able to make a beneficial profit to support the industry (Selby). However, there were many banks in New York that could not keep up with the stock demands and had to borrow money from other banks, which would end up hurting both banks in the long run when they need money the most (Lange 23). This was when the Federal Reserve Bank was established. This bank was made to strengthen the United States’ financial system (Lange 23). It had made several restrictions on borrowing money, instead of loosening them for the market, making it much harder for banks to survive (Lange 23). Investors and stock brokers had developed several payment strategies so that they could afford stocks at prices of three hundred to four hundred dollars per share at a time, while the average American was earning nearly fifteen hundred dollars annually (Selby).
The stock prices reached levels that they had never been before, quadrupling in amount since 1920 (“The Stock Market Crashes”). Many people had bought the stocks, in which they had relied on multiple bank loans to cover their expensive purchase (“The Stock Market Crashes”). These buyers were “convinced that rising stock prices would cover the risk they took of buying with borrowed money” (“The Stock Market Crashes”).
The government also had no control over the economy and the actions of brokers and the independent buyers and sellers of the securities (Selby).
This is how margin buying, which allowed any person to buy stock with only a percentage required to be paid immediately, started (Selby). Margin buying had made the stocks more affordable for the people, however, it made the banks weaker because they would continue to lose money (Selby). Some investors got bank loans to help them pay for the margin buy, which took even more money from the banks (Selby). This had resulted in there being little money to support the stocks’ values (Selby). Another factor of the stock market crash was that key economic symbols had begun to decline (“The Stock Market: Crash”). These symbols had included the freight car-loadings, and housing starts (“The Stock Market: …show more content…
Crash”).
The official date that is said that the stock market crashed was on October 29, 1929, however there were many events that made it clear that the crash was going to come. On September 3, 1929, the stock prices had reached their highest peak (Lange 30). Obviously, this did not seem like an issue because that means that the banks were gaining money. However, after this peak, the stock prices began to drop, causing investors, who had relied on the stocks with their money, to become chaotic (“The Stock Market: Crash”). Most investors had attempted to sell their stock prior to its value to drop even lower. On September 5, 1929, the National Business Conference had met. Here, economist Roger Babson had given a very important speech. He had said, “Sooner or later a crash is coming and it may be terrific. Factories will shut down and men will be thrown out of work. The vicious circle will get in full swing and the result will be a serious business depression” (Lange 30). This was important because it was clear to the United States that a crash was coming.
The crash was clearly expected due to the market’s economic decline. Babson had already know that due to this issue, many banks would become bankrupt and would soon go out of business, causing many Americans to lose their jobs, which would hurt not only the economy, but also their way of life, because the employees may be relying on their jobs to live, so without their jobs, they may not be able to afford to survive on their own. After this conference, several shares were being sold and traded. On October 19, 1929, more than three million shares were traded, and also the industrial average continued to fail (Lange 30). Again, on October 23, 1929, six million more shares were sold (“The Stock Market: Crash”).
Wall Street investors were extremely chaotic when it came to a possibility of losing money. “Ticker fell more than an hour behind events, and by the end of the day investors had to wait an hour and forty minutes to know how much they had made or lost” (“The Stock Market: Crash”). This says that if the investors had lost money, the delay caused from the wait, would make it nearly impossible to do anything to allow them to be able to recover from their losses (“The Stock Market: Crash”). On October 24, 1929, also known as “Black Thursday”, investors had become desperate to try to gain back money, and began to trade large quantities of their stocks (Lange 3). However, this did not help. The industrial average also fell much lower than it was in June (Lange 30). This erased all of the profits that the stockholders had made in the previous four months, causing all of their hard work cease to exist (Lange 30, 31).
Air pockets were also developed when the bid prices were lower than the asking prices that could cause the stocks to lose money within a short time period (Selby). Several communications between banks and companies had failed, the ticker lagged and continued to get slower, and the telephone lines got jammed, leaving the investors unaware of the trading action throughout the market (Carnagie). Brokers were also selling large blocks of stocks for any price that they may have been offered, just to make a profit (Carnagie). The day before the crash, October 28, 1929, the stock market had dropped nearly thirteen percent since the previous Friday, October 25 (Lange 3). This lead to the markets closure and many banks began issuing margin calls hoping to recover their losses and limit their exposure to the market (Selby).
On October 29, 1929, the stock market had finally crashed. This day was also known as “Black Tuesday”. The New York Times estimated that between eight and nine million dollars was lost on this day alone (Lange 4). The market had also fallen another twelve percent with about six and a half million shares traded (Lange 4). Many large investors, mainly millionaires, panicked with their sales, while the smaller investors had already lost everything that they had (Lange 33). “RCA shares were selling for $26, down from a high of $144” (Lange 33). This was a major problem because this meant that America’s economy was failing. This also shows that the market was desperate to make a sale, so that they were forced to lower their prices a tremendous amount just to make somewhat of a profit.
The stock market crash was marked as the beginning to one of the most devastating time periods in the United States, known as the Great Depression. Since the crash had caused many businesses to shut down, it caused the unemployment rate to rise. This had caused strain in several families, in which they found themselves getting into trouble financially (Lange 4, 38). Women and children would find small jobs in hope to make an earning to help their families strive, however, this had split up a lot of families, because the father was viewed to be the income provider of the household, and with the wives and children working, this was impossible (Lange 6). Children were sent to live with relatives while their parents tried their hardest to survive (Lange 6). Sometimes the men of the family could not handle the hurt or anxiety of not being able to make money for their families on their own, so they had often left altogether with other men on the country’s railway system in search of a better, stress-free life, and occasionally, boys, even girls, had joined them out of necessity (Lange 6). Also due to the unemployment rate, some families could not provide enough food for all of its children, causing the oldest to be sent out to fend for himself (Lange 6). Families also had small savings, and often had trouble paying for their rent and utilities, which led to the homeless population to rise (Lange 38).
Due to the extremely high unemployment percentage, millions of Americans were facing poverty issues (Thomas). However, this did cause American people to reduce their purchases, leading employers to reduce their workforce and hours of commitment (Thomas). The Great Depression also caused a drought, also known as the Dust Bowl, in the southern Plains which forced farmers to migrate in urban areas in search of work, which caused several areas, such as cities, to become overpopulated (Thomas). The stock market crash also affect many Americans emotionally. Many Americans had lost faith in the economic system, and the homeless and unemployed people lost self-respect as they struggled to survive (Thomas).
Fortunately, the United States’ economy was able to recover from the crash.
President Herbert Hoover made a solution that seemed to help this. He said that Americans were to continue to rely on themselves, because it was believed that self-reliance would help the people “pull them up by their bootstraps”, which created his theory of “rugged individualism” and volunteerism (Lange 39, Thomas). Many believed that the marketplace would use this plan to adjust itself eventually, and that the government should not intervene nor assist (Lange 39). There were many families that asked for assistance from the government, due to the fact that they had lost almost everything they owned, including their homes, but the government did not help them (Lange 38). President Hoover had felt that the government’s aid would weaken the country’s character, and that it should not be provided to the people (Lange 40). His administration was not immune to the people suffering, however, he did not just watch the suffering happen (Lange 41). This lead to the establishment of the Reconstruction Finance Corporation in 1932 (Lange 41). “Loaned money to state and local governments, who would then use it to start public work projects, and to failing businesses, including banks, railroads, insurance companies, and farm mortgage organizations” (Lange 41). If these industries could remain secured, then they would be able to continue to employ workers, and in hopes that the unemployment rate gradually decrease
(Lange 41).
However, this did not prevent the unemployment rate to rise. As the unemployment rates went up, the wages decreased (Lange 44). As more men became unemployed, the view of men being the head of their households weakened (Lange 44). This is because they could no longer provide for their families, so this resulted in the women to take on more leadership roles (Lange 44).
The stock market had been falling at such a rapid pace, that it had become questionable on whether or not the United States would be able to recover, because it had led the United States into a depressing period in history. Unfortunately, history has repeated itself, because the since the 1929 crash, the United States, especially Wall Street, has experienced several other crashes, only had the knowledge on how to not go into another Depression. A recent stock market crash occurred on September 29, 2008. The Industrial Average had fallen about seven hundred and seventy eight points in just one day (Amadeo). Luckily, with the technology that the United States has access to today, and knowledge about the history of the country, the economy was able to recover fairly quickly.
The stock market had officially reached it’s lowest point on October 29, 1929. Leading up to this day, there were several stock markets across the country that had begun to lose value of majority of their stocks, compared to the beginning of the decade (Selby). This was because A clear representation of the stocks falling was known as the American Stock Exchange. The American Stock Exchange, which can often …show more content…
be referred to as the New York Stock Exchange or the Curb Exchange, showed the most significant adjustments that showed the values of many stocks as they began to fall from their highs, while also comparing them over the years prior to the crash (Selby).
The stock market had crashed when the banks had begun to fail. The virtue of the stock’s desirability caused the prices to rise (Selby). Companies were forced to raise their prices so they would be able to make a beneficial profit to support the industry (Selby). However, there were many banks in New York that could not keep up with the stock demands and had to borrow money from other banks, which would end up hurting both banks in the long run when they need money the most (Lange 23). This was when the Federal Reserve Bank was established. This bank was made to strengthen the United States’ financial system (Lange 23). It had made several restrictions on borrowing money, instead of loosening them for the market, making it much harder for banks to survive (Lange 23). Investors and stock brokers had developed several payment strategies so that they could afford stocks at prices of three hundred to four hundred dollars per share at a time, while the average American was earning nearly fifteen hundred dollars annually (Selby).
The stock prices reached levels that they had never been before, quadrupling in amount since 1920 (“The Stock Market Crashes”). Many people had bought the stocks, in which they had relied on multiple bank loans to cover their expensive purchase (“The Stock Market Crashes”). These buyers were “convinced that rising stock prices would cover the risk they took of buying with borrowed money” (“The Stock Market Crashes”).
The government also had no control over the economy and the actions of brokers and the independent buyers and sellers of the securities (Selby).
This is how margin buying, which allowed any person to buy stock with only a percentage required to be paid immediately, started (Selby). Margin buying had made the stocks more affordable for the people, however, it made the banks weaker because they would continue to lose money (Selby). Some investors got bank loans to help them pay for the margin buy, which took even more money from the banks (Selby). This had resulted in there being little money to support the stocks’ values (Selby). Another factor of the stock market crash was that key economic symbols had begun to decline (“The Stock Market: Crash”). These symbols had included the freight car-loadings, and housing starts (“The Stock Market: …show more content…
Crash”).
The official date that is said that the stock market crashed was on October 29, 1929, however there were many events that made it clear that the crash was going to come. On September 3, 1929, the stock prices had reached their highest peak (Lange 30). Obviously, this did not seem like an issue because that means that the banks were gaining money. However, after this peak, the stock prices began to drop, causing investors, who had relied on the stocks with their money, to become chaotic (“The Stock Market: Crash”). Most investors had attempted to sell their stock prior to its value to drop even lower. On September 5, 1929, the National Business Conference had met. Here, economist Roger Babson had given a very important speech. He had said, “Sooner or later a crash is coming and it may be terrific. Factories will shut down and men will be thrown out of work. The vicious circle will get in full swing and the result will be a serious business depression” (Lange 30). This was important because it was clear to the United States that a crash was coming.
The crash was clearly expected due to the market’s economic decline. Babson had already know that due to this issue, many banks would become bankrupt and would soon go out of business, causing many Americans to lose their jobs, which would hurt not only the economy, but also their way of life, because the employees may be relying on their jobs to live, so without their jobs, they may not be able to afford to survive on their own. After this conference, several shares were being sold and traded. On October 19, 1929, more than three million shares were traded, and also the industrial average continued to fail (Lange 30). Again, on October 23, 1929, six million more shares were sold (“The Stock Market: Crash”).
Wall Street investors were extremely chaotic when it came to a possibility of losing money. “Ticker fell more than an hour behind events, and by the end of the day investors had to wait an hour and forty minutes to know how much they had made or lost” (“The Stock Market: Crash”). This says that if the investors had lost money, the delay caused from the wait, would make it nearly impossible to do anything to allow them to be able to recover from their losses (“The Stock Market: Crash”). On October 24, 1929, also known as “Black Thursday”, investors had become desperate to try to gain back money, and began to trade large quantities of their stocks (Lange 3). However, this did not help. The industrial average also fell much lower than it was in June (Lange 30). This erased all of the profits that the stockholders had made in the previous four months, causing all of their hard work cease to exist (Lange 30, 31).
Air pockets were also developed when the bid prices were lower than the asking prices that could cause the stocks to lose money within a short time period (Selby). Several communications between banks and companies had failed, the ticker lagged and continued to get slower, and the telephone lines got jammed, leaving the investors unaware of the trading action throughout the market (Carnagie). Brokers were also selling large blocks of stocks for any price that they may have been offered, just to make a profit (Carnagie). The day before the crash, October 28, 1929, the stock market had dropped nearly thirteen percent since the previous Friday, October 25 (Lange 3). This lead to the markets closure and many banks began issuing margin calls hoping to recover their losses and limit their exposure to the market (Selby).
On October 29, 1929, the stock market had finally crashed. This day was also known as “Black Tuesday”. The New York Times estimated that between eight and nine million dollars was lost on this day alone (Lange 4). The market had also fallen another twelve percent with about six and a half million shares traded (Lange 4). Many large investors, mainly millionaires, panicked with their sales, while the smaller investors had already lost everything that they had (Lange 33). “RCA shares were selling for $26, down from a high of $144” (Lange 33). This was a major problem because this meant that America’s economy was failing. This also shows that the market was desperate to make a sale, so that they were forced to lower their prices a tremendous amount just to make somewhat of a profit.
The stock market crash was marked as the beginning to one of the most devastating time periods in the United States, known as the Great Depression. Since the crash had caused many businesses to shut down, it caused the unemployment rate to rise. This had caused strain in several families, in which they found themselves getting into trouble financially (Lange 4, 38). Women and children would find small jobs in hope to make an earning to help their families strive, however, this had split up a lot of families, because the father was viewed to be the income provider of the household, and with the wives and children working, this was impossible (Lange 6). Children were sent to live with relatives while their parents tried their hardest to survive (Lange 6). Sometimes the men of the family could not handle the hurt or anxiety of not being able to make money for their families on their own, so they had often left altogether with other men on the country’s railway system in search of a better, stress-free life, and occasionally, boys, even girls, had joined them out of necessity (Lange 6). Also due to the unemployment rate, some families could not provide enough food for all of its children, causing the oldest to be sent out to fend for himself (Lange 6). Families also had small savings, and often had trouble paying for their rent and utilities, which led to the homeless population to rise (Lange 38).
Due to the extremely high unemployment percentage, millions of Americans were facing poverty issues (Thomas). However, this did cause American people to reduce their purchases, leading employers to reduce their workforce and hours of commitment (Thomas). The Great Depression also caused a drought, also known as the Dust Bowl, in the southern Plains which forced farmers to migrate in urban areas in search of work, which caused several areas, such as cities, to become overpopulated (Thomas). The stock market crash also affect many Americans emotionally. Many Americans had lost faith in the economic system, and the homeless and unemployed people lost self-respect as they struggled to survive (Thomas).
Fortunately, the United States’ economy was able to recover from the crash.
President Herbert Hoover made a solution that seemed to help this. He said that Americans were to continue to rely on themselves, because it was believed that self-reliance would help the people “pull them up by their bootstraps”, which created his theory of “rugged individualism” and volunteerism (Lange 39, Thomas). Many believed that the marketplace would use this plan to adjust itself eventually, and that the government should not intervene nor assist (Lange 39). There were many families that asked for assistance from the government, due to the fact that they had lost almost everything they owned, including their homes, but the government did not help them (Lange 38). President Hoover had felt that the government’s aid would weaken the country’s character, and that it should not be provided to the people (Lange 40). His administration was not immune to the people suffering, however, he did not just watch the suffering happen (Lange 41). This lead to the establishment of the Reconstruction Finance Corporation in 1932 (Lange 41). “Loaned money to state and local governments, who would then use it to start public work projects, and to failing businesses, including banks, railroads, insurance companies, and farm mortgage organizations” (Lange 41). If these industries could remain secured, then they would be able to continue to employ workers, and in hopes that the unemployment rate gradually decrease
(Lange 41).
However, this did not prevent the unemployment rate to rise. As the unemployment rates went up, the wages decreased (Lange 44). As more men became unemployed, the view of men being the head of their households weakened (Lange 44). This is because they could no longer provide for their families, so this resulted in the women to take on more leadership roles (Lange 44).
The stock market had been falling at such a rapid pace, that it had become questionable on whether or not the United States would be able to recover, because it had led the United States into a depressing period in history. Unfortunately, history has repeated itself, because the since the 1929 crash, the United States, especially Wall Street, has experienced several other crashes, only had the knowledge on how to not go into another Depression. A recent stock market crash occurred on September 29, 2008. The Industrial Average had fallen about seven hundred and seventy eight points in just one day (Amadeo). Luckily, with the technology that the United States has access to today, and knowledge about the history of the country, the economy was able to recover fairly quickly.