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Causes Of The 1929 Stock Market Crash essay

Essay on Causes Of The 1929 Stock Market Crash

Christopher Pavlat
Econ- 305 11170-02
Professor Velázquez

Causes of the 1929 Stock Market Crash

Few economic crises match that of October 24, 1929. On that day America faced the worst stock market crash in its entire existence. Over the following month the stock market fell from its peak and spiraled toward the ground in flames. The booming New Era of the “Roaring Twenties” had seen America embrace a sense of prosperity and vast economic expansion. Consumption skyrocketed as Americans relished in the heyday of western capitalism. The environment that emerged from this climate helped to bring about an “orgy of speculation” sending Americans scrambling for easy profits in the bull market of the 1920s. However through excessive leveraging, borrowing on margin, and a restrictive economic policy, the boom soon turned to bust. The belief that high price levels could be maintained indefinitely was proved drastically wrong in what will forever be remembered as one of the worst economic disasters in the annals of American History.

What was set in motion in late October 1929 can be traced back to the brewing market conditions and economic environment of the very decade it which the crash took place. A time of high production and employment, the “Roaring Twenties” were indeed just that. Gleaming triumphantly from its first victory in a World War, America’s stage was set for a period of tremendous optimism and prosperity. Soldiers returning home from the war brought with them money in their pockets ready to spent on booming consumer market. Returning soldiers quickly re-entered the workforce of factories demobilizing for the production of vast consumer goods. By the time Calvin Coolidge took the oath of office in August of 1923 the “Roaring Twenties” were in full bloom. And yet the blossoming had just begun. “Between 1925 and 1929, the number of manufacturing establishment increased from 183,900 to 206,700; the value of their output rose from $60.8 billions to…

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