Stock Market Crash

What is the stock market crash?

A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paperwealth. Crashes are driven by panic as much as by underlying economic factors. The 1929 Stock Market crash was a result of many economic imbalances and structural failings.

Stock Market info

  • It lasted for four days.
  • it Led to a catastrophic sell-off.
  • The crash happen on Black Tuesday, October 24, 1929. The stock market opened at 305.85, falling 11% during the day, barely a stock market correction. It regained, to close just 2% down for the day.
  • Great depression.
  • This was a time of wealth and excess.
  • Oct 28,1929 Black Monday: More investors decided to get out of the market, and it fell 13%.Then another 12% fell the next day.

  • The beginning of World War II marked the beginning of America’s recovery out of the Great Depression.

  • Economic growth went down 50%

  • World trade went down 65%

1929 Wall Street Stock Market Crash

Causes of the stock market crash

1. Overproduction and Underconsumption of consumer goods and farm products.
2. Consumer’s debts
3. Widening gap between the rich and the poor; uneven distribution of income; wealth was not being shared fairly.
4. Wages did not keep pace with the growth of production.
5. Heavy increases in stock speculation and gambling; buying stocks on margin.
6. Shaky banking contributed to speculation and an overexpansion of credit.
7. Depressed conditions on the farms (overproduction of farm products; falling prices, and farmers’ debts.)
8. Laissez-faire economic approach by the government (the consolidation of corporations was not challenged under antitrust laws; tax policies that favored the wealthy).
9.The Business Cycle: The economy was bound to go down eventually; it can only be prosperous for a certain period of time.
10. The federal government introduces a tight money policy in order to control credit.