Introduction
The Market Crash of 1929 is classified as one of the climatic events that marked the end of one age and the beginning of another. This is because the U.S. economy, which was booming, was forced to a sudden reversal leading to the massive crash. The Stock Market Crash, also called Black Tuesday, commenced on a Monday (October 28), when the stock market lost 12.8%.
On Black Tuesday, Wall Street investors traded shares worth $16 million and lost another 12%. Billions of dollars were lost, and investors were wiped out of the New York Stock Exchange during the event. The aftermath was that Americans and the rest of the industrialized nations spiraled into a prolonged and deep-lasting economic downturn. The Dow Jones Industrial Average fell by approximately 13%, thus leading the Federal Reserve to differ on how to support the financial system or respond to the crash.
Thesis statement
The Stock Market Crash was an important event in American History, as it marked the beginning of the Great Depression and caused some economic devastation, which largely impacted the nation and its economic future.
Reason for the Crash
The key reason for the crash was the roaring twenties, which roared longest and loudest on the market exchange. The rise in the Industrial Average and share prices in the market happened during an era of optimism when families had prospered and new technologies, including telephones and automobiles, proliferated. The markets were filled with borrowed money, which wheeled stock prices.
The Federal Reserve authorized reserve banks to accept securities for discounts loan properties that financed industrial, agricultural, and commercial activities and prohibited them from receiving bills, notes, and drafts that covered investments. Other reasons for the market crash included the struggling agricultural sector, low wages, and the creation of debts that were hard to pay back.
Impact of the Crash
The Black Tuesday event had a massive impact on the future of Americans and the rest of the industrialized world. The price continued to drop, and the nations slummed into Great Depression. Many of the African banks failed, and unemployment grew to newer heights. The people of color were forced to go for traditional jobs that were more insulated compared to those that were dependent on fluctuating markets.
Prevention
The market crash of 1929 could have been prevented if the Federal Reserve had stopped the concept of buying stocks on margin. Margin trading seriously overinflated the markets, forcing the market to pop out big. Stopping investors from trading stocks on margin would have prevented buying stock for quick resell but only putting a small percentage of actual value. The Federal Reserve could have also stopped injecting extra reserved papers to forestall any bank reserve shortage.
Conclusion
The stock market crash was disastrous and impacted American society and the economy. The event led to the Great Depression, economic hardship, and social disturbance. Various factors, including overproduction, lack of government regulation, and over-speculation, caused the Market Crash. The aftermath included unemployment, homelessness, bank failure, and loss of confidence in the financial system. The subsequent depression and the market crash continue to shape the daily economic regulation and policies, reminding investors of the importance of financial management, government oversight of the financial market, and responsible investing.
Bibliography
Corbett, P. Scott, Volker Janssen, John M. Lund, Todd J. Pfannestiel, Paul S. Vickery, and Oral Roberts. US history. OpenStax, 2017.